The change is expected to save Medicaid $3.6 million next year. But it won't be enough to cure the fiscal ills of the program, which will struggle to get by on the $615 million in its budget for fiscal 2014, officials say.
"I'm the optimist," Williamson said. "I expect us to slide into Sept. 30 (2014) flat broke."
Williamson spoke Friday at the first meeting of Alabama's Medicaid Pharmacy Study Commission, which Gov. Robert Bentley appointed earlier this year to find ways to cut the costs of providing drugs for Medicaid patients.
The state has had difficulty finding new ways to pay for Medicaid, the joint state-and-federal program that provides health care for people in poverty. There are now 938,000 people enrolled in the program, nearly 200,000 more than in 2008. The program now takes up $615 million of the $1.8 billion General Fund budget, nearly twice what it cost before the recession.
Earlier this year, lawmakers passed a bill to reform much of the program by placing it under "regional care organizations" that are expected to trim the growth in costs for basic medical services.
But the state has also undertaken several less-publicized efforts to cut costs or raise revenues in recent years, including hikes in nursing homes' bed taxes and increases in Medicaid co-pays, which took effect earlier this year.
Williamson said Medicaid has actually done a good job of managing its per-person cost for prescriptions in recent years. The state paid $593 for drugs for the average enrollee in 2012, down from $611 per person in 2008, despite the overall rise in drug costs.
That change, he said, was largely due to the state's reliance on generic drugs for Medicaid customers. Eighty-seven percent of Medicaid prescriptions in Alabama are filled with generics, Williamson said.
Beginning in January, Williamson said, the state will limit Medicaid patients to four brand-name prescription drugs, down from the five currently permitted. The change is expected to save $2.9 million per year.
Ending Medicaid payments for over-the-counter drugs is expected to save another $3.6 million per year. Both changes were planned before the meeting and are not part of the larger reform the Pharmacy Study Commission plans to undertake. Williamson said the commission was just beginning to study its options for reform.
"I don't know how we compare to other states," he said. "Have other states done a better job?"
While most over-the-counter medicines won't be paid for by Medicaid after Oct. 1, Williamson said insulin will still be covered. Board members seemed to disagree about whether insulin was indeed an over-the-counter medication, but Williamson assured them that it would be covered in any case.
Commission member Rep. Jim McClendon, R-Springville, said he was surprised to hear Medicaid was paying for over-the-counter drugs to begin with, given the relatively low cost of those drugs.
"Makes you wonder whether it's worth all the paperwork and reimbursement, when somebody's buying a packet of generic aspirin," he said.
Jim Carnes, a spokesman for the group Alabama Arise and the consumer representative on the panel, said he wasn't sure what effect the over-the-counter change would have on customers.
"Anything that's a barrier to access is something we're going to be concerned about," he said.
Williamson said the move mimics the situation of most people with private insurance, who have to pay for over-the-counters out of their own pockets.
"We're trying to find a balance and pay for the most important things," he said.
Capitol & statewide correspondent Tim Lockette: 256-294-4193. On Twitter @TLockette_Star.