PhRMA Files Suit against U.S. Government to Block Michigan Prescription Drug Formulary
The Pharmaceutical Research and Manufacturers of America on Friday filed suit against the Bush administration over its approval of a Michigan program requiring pharmaceutical companies to provide discounts to have their treatments placed on the state's prescription drug formulary for Medicaid and other public health insurance programs, the New York Times reports (Pear, New York Times, 7/2). To establish the formulary, Michigan organized prescription drugs into therapeutic categories, and a small group of pharmacists and doctors appointed by the state selected several best-in-class treatments in each category. The state asked drug companies to reduce their prices to match the lowest best-in-class price to have their treatments included on the formulary. Doctors can prescribe medications not included on the formulary but have to call a group of pharmacy technicians for approval (American Health Line, 1/18). HHS Secretary Tommy Thompson approved the program in January.
The lawsuit, filed in federal District Court in Washington, D.C., alleges that the Michigan program "restricts access to medicines for America's most vulnerable patients" based solely on price. Under federal Medicaid law, states can exclude prescription drugs from a formulary only when they provide no "therapeutic advantage" over other treatments on the list. The lawsuit seeks a preliminary injunction to block the Michigan program and similar programs in Florida and Louisiana (New York Times, 7/2). Ten other states are seeking to implement similar measures. The lawsuit names Thompson and CMS Administrator Thomas Scully as defendants (Gold/Hensley, Wall Street Journal, 7/2). "States are sending Medicaid patients to the back of the health care bus, forcing them to settle for older, less-effective medicines instead of the drugs their doctors believe would work best for them," Jan Faiks, assistant general counsel for PhRMA, said (Detroit Free Press, 7/2).
According to the Wall Street Journal, the PhRMA lawsuit "essentially challenges the legality" of state programs that use prescription drug formularies to "extract any price concession from drug makers" and "reflects mounting industry worries" that more states will enact similar programs. Michigan officials said that the program, which began in February, saves the state $800,000 per week and will save an estimated $50 million per year (Wall Street Journal, 7/2). HHS spokesperson William Pierce said, "We're disappointed that, at a time we're trying to provide states with the flexibility to extend access to people who might not get it, the pharmaceutical industry is trying to stop the program from going forward" (Pugh, Knight Ridder/Tallahassee Democrat, 7/2). "Our lawyers have reviewed the lawsuit. We firmly believe that Secretary Thompson had the authority to take the action he took," Pierce added. Ray Hanley, the Medicaid director in Arkansas and chair of the National Association of State Medicaid Directors, said, "The implication that states are trying to push Medicaid recipients onto the cheapest, oldest drugs to save money is outrageous. In developing lists of preferred drugs, states have put a lot of time and effort into determining what is clinically appropriate. Cost has been secondary" (New York Times, 7/2).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.