Court Strikes Down Discount Vermont Rx Drug Program
An appeals court, upholding a pharmaceutical industry challenge, ruled Friday that HHS "improperly" approved Vermont's plan to offer reduced prescription drug prices through Medicaid to seniors and some non-elderly adults who would not quality for traditional Medicaid assistance, the AP/New York Times reports. Under the Pharmacy Discount Program, the state offered enrollees discounts of as much as 30% and then "required pharmaceutical companies to make up the difference" (AP/New York Times, 6/10). The program, which went into effect earlier this year allowed all Medicare beneficiaries who lack prescription drug coverage access to discounted prices through the current Medicaid program (Vermont already had a drug program for Medicare beneficiaries with incomes below 150% of the federal poverty level). The program also expanded access to prescription drug discounts to non-elderly adults with incomes at or below 300% of the federal poverty level who lacked coverage.
A three-judge panel of the U.S. Court of Appeals for the D.C. Circuit ruled that Vermont "lacked the authority to offer the same prescription rebates and discounts offered under federal Medicaid insurance," because Congress "imposed those rebate requirements to reduce the cost of Medicaid." Therefore, the court said, HHS should not have approved the program because it would not result in any overall Medicaid savings. The Pharmaceutical Research and Manufacturers of America, which brought the suit against Vermont, "was pleased" with the ruling, saying in a statement, "Vermont's plan would have put the Medicaid program -- the nation's safety net for the poor and disabled -- in jeopardy" (AP/New York Times, 6/10). Vermont had estimated that nearly 70,000 state residents without drug coverage, including almost 38,000 Medicare beneficiaries, would have been eligible to receive an estimated average discount of 17.5% on drug purchases (American Health Line, 12/14/00). Gov. Howard Dean (D) said that ruling was "a big win for the pharmacy companies and a big loss for Vermont's seniors who need medication" (AP/New York Times, 6/10). The opinion by the appeals court is available at http://pacer.cadc.uscourts.gov/common/opinions/200106/01-5029a.txt.