Rx DRUG COSTS: States Work to Lower Prices
Saturday's Philadelphia Inquirer reported on the growing number of states that have created "innovative and controversial" programs to address "soaring prescription drug prices." Last week, a federal court ruled that Maine's "drug price-control" legislation cannot go into effect Jan. 1 as was scheduled and must undergo "further judicial review." Maine's law would direct the state to negotiate lower drug prices for 325,000 state residents who lack prescription drug insurance by "pressur[ing]" drug companies to pay the state rebates on drugs sold to those people. The law would allow Maine officials to impose price controls "at the retail level in 2003" if the rebates fail to reduce drug prices by 15% immediately and 35% by October 2001. Other states have joined the movement to lower prescription drug prices. Last winter, all six New England states, as well as Pennsylvania and New York joined together to form the Northeast Legislative Association on Drug Prices, a group that "intends to use collective buying leverage to negotiate lower prices." The group also is discussing "fair-pricing boards" that would determine medication prices and educating physicians to recommend generic drugs or cheaper alternatives rather than newer, brand-name medications. Similarly, Iowa and Washington state plan to use bulk purchasing to negotiate lower prices for seniors in "buyers clubs." California and Florida have taken somewhat different approaches, passing laws that extend drug coverage under Medicaid to Medicare beneficiaries. In Arkansas, lawmaker Bobby Lee Trammell plans to introduce a bill that would prohibit drug companies from charging more in Arkansas than they do in Mexico or Canada.
States' efforts "are a legal and economic nightmare" for drug companies, and industry lobbyists "are working hard on state legislatures, particularly those expected to introduce bills modeled after Maine's," the Inquirer reports. Because Maine's law requires doctors caring for Medicaid and Medicare patients to secure state permission to prescribe drugs made by companies that fail to comply with the state's law, the law "would make them jump bureaucratic hurdles that could severely cut their sales." Maine's Medicaid and Medicare programs collectively spend $225 million per year on drugs. Jeff Trewhitt, spokesperson for the
Pharmaceutical Research and Manufacturers of America, said that the "provision is retaliatory and violates federal Medicaid law, which allows such action only for health and safety reasons." Trewhitt added that the law might be "an unconstitutional attempt to restrict interstate commerce" because it "seeks a rebate for drugs dispensed in Maine even if the medications were sold originally to wholesalers outside the state." While Maine's human services commissioner Kevin Concannon "concedes" that Maine's law might reduce drugmakers' profits, he said that "the money will be recouped through increased sales" (Pugh, Philadelphia Inquirer, 10/28).