Rx COSTS: NE States May Join Forces to Fight Costs
New England lawmakers and public officials are "exploring the idea of combining entire state populations, perhaps even all of New England, into giant drug purchasing groups to wrest the deep discounts and rebates that drug companies now grant only to favored customers such as HMOs and Medicaid programs," the Boston Globe reports. New England states' legislators also are considering possibilities to legislate 20% to 40% pharmaceutical price discounts -- price controls at the state level. The two proposals come at a time when the "soaring cost of prescription drugs" has become the "number one health policy problem of the day." The six New England states are spending $5.4 billion annually on prescription drugs. Constituents, upset by high prices, are taking advantage of more direct access to local legislators. Vermont state Sen. Peter Shumlin (D) said of the state-level approach, "It only makes sense, if Congress isn't going to anything, to explore how states can work together." On Thursday, Shumlin plans to assemble legislative leaders and policy advisers from Massachusetts, Vermont, Maine and New Hampshire to discuss how to control prescription drug costs. Massachusetts already has created a drug-purchasing pool -- a provision included in the state budget passed last month -- that could include 25% of the state's population (Knox, 12/12). The Wall Street Journal reports that the plan bundles together state employees, Medicaid and Medicare recipients and those without prescription drug coverage, and could save them and state taxpayers about $170 million a year, according to former U.S. Rep. Joseph Kennedy. A state-appointed pharmacy benefits manager will be charged with purchasing for the pool and the state will contract with a not-for-profit group to develop and manage the program. Under the plan, the participants -- 500,000 uninsured and the 300,000 seniors with Medicare but no drug benefits -- will pay for their own medication but at state-negotiated discounts. Kennedy said, "It is hard to justify charging just the poorest and most vulnerable people in our society the most money for a basic necessity of life."
Frustrated Drug Cos.
Drug companies, including Merck & Co., American Home Products Corp., Biogen Inc., Genzyme Corp. and Millenium Pharmaceuticals, have written Massachusetts Gov. Paul Cellucci (R), urging a gubernatorial veto. In its letter, Merck charged that price controls "have repeatedly been shown to stifle innovation and the discovery of new technology." Moreover, some patients groups have criticized the plan, specifically objecting to a proposed formulary that would restrict coverage to a list of approved drugs. Carl Dixon, executive director of the Kidney Cancer Association, said, "This whole thing seems to be putting government between the patient and their physicians, and that's very troubling" (Johannes, Wall Street Journal, 12/13).
Former U.S. Rep. Joseph Kennedy and former Massachusetts Gov. William Weld tout the drug pool proposal in Sunday's Boston Globe, arguing, "Negotiating discounts with drug companies and pharmacies on behalf of the most vulnerable in our state is an opportunity to use the marketplace to address an urgent social need." Kennedy and Weld note that bargaining with drug companies and pharmacies has resulted in 30% to 50% reductions in drug prices for 4.5 million Massachusetts residents and 75% of the U.S. population. They argue that their provision will deliver 30% savings for about 1.6 million consumers. Through a reduction in state health care reimbursements for the uninsured, an expansion of Medicaid savings and an increase in state employee savings, the state's budget will be cut by $20 million -- resulting in millions of dollars in taxpayer savings, Kennedy and Weld propose. The former lawmakers conclude that "the time has come to make all our citizens benefit from the miracles of modern science" (12/12).