Federal Court Upholds Michigan Prescription Drug Formulary

Michigan can continue a program that requires physicians to use a formulary when prescribing drugs to low-income patients in public health programs, the U.S. Court of Appeals for the District of Columbia ruled on Friday, the New York Times reports. Michigan created its preferred drug list by identifying "the most effective products in each of 40 therapeutic categories" and automatically including on the list the least expensive of those medications. Drug companies can pay supplemental rebates to the state to include other products on the list (Pear, New York Times, 4/6). Doctors can prescribe medications not included on the formulary, but they must first call a group of pharmacy technicians for approval. The Pharmaceutical Research and Manufacturers of America and mental health advocates claimed in a lawsuit that the formulary -- which the state Department of Community Health says saves the state $850,000 per week -- is dangerous and unconstitutional because the full state Legislature never considered the program. The Michigan Court of Appeals in December 2002 ruled that the program is legal. A Michigan federal court dismissed the lawsuit in March 2003, saying that Congress has given states the freedom to begin "prior-authorization prescription drug programs" and that PhRMA "failed to show" Michigan was acting illegally. Pharmaceutical companies appealed the ruling to the D.C. court (California Healthline, 4/1/03). A unanimous ruling by a three-judge panel said, "The available data confirm that in practice, the prior-authorization requirement has proved neither burdensome nor overly time-consuming." The opinion, written by Judge Karen LeCraft Henderson, says that a state can "establish a Medicaid prior-authorization program in order to secure rebates on drugs for non-Medicaid populations if a state demonstrates, through appropriate evidence, that the prior-authorization program will further the goals and objectives of the Medicaid program."

The ruling is "significant because a rapidly growing number of states have adopted 'preferred drug lists' like Michigan's" in an effort to control rising drug costs, the Times reports. According to the National Conference of State Legislatures, 26 states are currently using such formularies, and 10 others have implemented legislation authorizing their use. Wanda Moebius, a spokesperson for PhRMA, said, "The court has decided that Michigan's Medicaid program can continue to allow government officials, rather than doctors and patients, to decide which medicines will be available. When the government makes these decisions, they are often based on cost and not on patient health." Moebius said she does not know whether PhRMA will appeal the ruling (New York Times, 4/6).