HHS Approves Plan by Five States To Form Prescription Drug Purchasing Pool
HHS Secretary Tommy Thompson on Thursday approved a plan by five states to form a purchasing pool and "seek deeper discounts on prescription drugs for more than 900,000 Medicaid recipients," the New York Times reports. The five states -- Michigan, Vermont, New Hampshire, Alaska and Nevada -- estimate that the program will save them a total of more than $12 million in 2004 (Pear, New York Times, 4/23). The states will use the same pharmacy benefit manager, First Health Services, to negotiate prices (Rayno, Manchester Union Leader, 4/23). According to federal health officials, each state will maintain a list of preferred drugs that is supervised by local physicians and pharmacists (New York Times, 4/23). CMS Administrator Mark McClellan said in a conference call Thursday that "[e]ach state in the pool has its own preferred drug list, but there are enough overlaps to provide greater purchasing power," the Union Leader reports (Manchester Union Leader, 4/23). Michigan and Vermont officials first introduced the proposal in February 2003. A legal challenge against the program was filed by the Pharmaceutical Research and Manufacturers of America, which said that "aspects of the program violated federal law because the states would create lists of 'preferred drugs' from which doctors could prescribe for their Medicaid patients," USA Today reports. The U.S. Court of Appeals for the District of Columbia upheld a lower court ruling rejecting that argument (Appleby, USA Today, 4/23). According to previous reports, CMS had informed Michigan officials in February that it would reject the purchasing pool because it violated federal procurement procedures (American Health Line, 2/24). However, in a conference call Thursday, Federal Medicaid Director Dennis Smith said that "earlier problems have now been resolved," CongressDaily reports. He added, "The states ultimately did procure these contracts in a competitive way. They did follow our requirements that the contracts be put out for bids" (Rovner, CongressDaily, 4/23).
Michigan Gov. Jennifer Granholm (D) said the purchasing pool will benefit "our most vulnerable citizens" (New York Times, 4/23). New Hampshire Gov. Craig Benson (R) said, "The multi-state pooling initiative will go a long way to streamline costs and provide affordable medication to low income citizens" (Manchester Union Leader, 4/23). But PhRMA spokesperson Wanda Moebius said, "Multi-state agreements lead to government-selected lists of drugs and a one-size-fits-all approach to medicine," adding that a purchasing pool was "the equivalent of a government-run health maintenance organization, making decisions based on cost rather than the needs of individual patients." However, Granholm said that the purchasing pool differs from programs like the one in Canada, where government agencies regulate drug costs. She added, "We use a competitive-bidding process that allows manufacturers to work with states and lower their prescription drug prices" (New York Times, 4/23). Thompson said Thursday that he "envisions regional or even national drug-buying agreements in the future," the AP/Boston Globe reports (AP/Boston Globe, 4/23). Benson said, "Minnesota, Hawaii and Tennessee intend to join the pool, with more states likely to follow" (New York Times, 4/23). According to the AP/Globe, Illinois and Indiana also have considered the joining the pool (AP/Boston Globe, 4/23). Federal officials did not say whether they would limit the number of states participating in the pool (New York Times, 4/23).
According to USA Today, the decision to allow the purchasing pool might not "cool" states' efforts to allow residents to purchase medicines from Canada. Wendell Packard, press secretary for Benson, said "Why not do both?" Packard said, "The governor feels it's important to seek any and every avenue to lower the cost of health care." New Hampshire recently launched a Web site to help residents purchase drugs from Canada. McClellan did not comment on the pool's effect on reimportation, but he "stressed that such pools are 'a proven, legal and safe way to lower drug costs,'" USA Today reports (USA Today, 4/23).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.