Something called the National Center for Policy Analysis has released a study
(purely coincidental to legislative discussions of Medicaid expansion) that says Arkansas is overspending on drugs in its Medicaid program
because of too-high dispensing fees for retail pharmacists, a failure to have group negotiation with drug companies and insufficient use of cheaper generics.
Unfamiliar with NCPA? From Sourcewatch
The National Center for Policy Analysis (NCPA) is a free market think tank primarily funded by private foundations established by wealthy conservative business families and billionaires, including Charles and David Koch. It is a "communications and research foundation dedicated to providing free market solutions to today's public policy problems ... [and] prides itself on aggressively marketing its products for maximum impact by 'targeting key political leaders and special interest groups, establishing on-going ties with members of the print and electronic media, and testifying before Congress, federal agencies, state lawmakers, and national organizations.'"
... NCPA has ties to the American Legislative Exchange Council (ALEC).
As I understand it, some of the push to change Arkansas's system can be traced to profit-making pharmacy benefit managers, middlemen who pocket money from overseeing drug programs, often at the expense of small-town pharmacists. Drug prices in Arkansas are pegged to wholesale price and the dispensing fee is also based on an audited figure.