Rx Drug Industry Takes Steps to Block Michigan Formulary
The pharmaceutical industry took two "major" actions last week designed to head off Michigan's plan to "compel" drug makers to lower the prices of their medications for Medicaid beneficiaries and participants in state-sponsored drug programs by creating a preferred list of drugs, the Wall Street Journal reports. On Nov. 30, the Pharmaceutical Research and Manufacturers of America filed a lawsuit in Michigan court alleging that the program, which was approved last month "in the face of extreme budget pressure," violates the state constitution and state laws. On a "second front," six large drug makers said they will not offer the state "any price concessions, even at the risk of losing market share to competitors that are willing to slash prices," the Journal reports. The challenge to the drug formulary program is the latest from the pharmaceutical industry, as it won a suit against Vermont this summer and lost one against Maine, and is currently waiting to proceed with a suit against Florida. According to David Kreling, a professor at the University of Wisconsin School of Pharmacy, the industry's strategy in the case of Michigan could be, "let's nip this in the bud," before other states and health plans copy its approach.
The Michigan program, which is projected to save the state at least $42 million, applies to Medicaid beneficiaries and seniors in state-sponsored programs and covers a total of about 1.6 million residents. The program has organized medications into therapeutic categories and a "small group of pharmacists and doctors" appointed by the state have chosen a few "best in class" drugs in each category to form the preferred list. The state asked companies to lower their price to match the lowest "best in class" price for any drug not selected for the formulary. This list "could be released as early as this week." To prescribe non-preferred medications, doctors would have to "justify their decision in a telephone call to a phone bank of pharmacy technicians -- a requirement expected to discourage use of those drugs," the Journal reports.
The drug industry says the program would limit patients' ability to obtain medications and threaten their quality of care. "We don't like suing states," Jan Faiks, PhRMA's assistant general counsel, said, but added that the association believed a challenge was necessary because the program would "cause patients to suffer and lose access to the smartest drugs in the world." The six companies that told the state they will not participate -- Eli Lilly, Johnson & Johnson, Merck, Pfizer, Pharmacia and Wyeth-Ayerst Laboratories -- "make widely prescribed drugs that dominate several of the biggest treatment classes," a fact that "could pressure Michigan to back away from its plan," the Journal reports. Joseph Scodari, group chair of Johnson & Johnson's North American pharmaceutical business, said the company decided not to participate because of the program's "very onerous" limits on what drugs doctors could prescribe. A Pfizer spokesperson, meanwhile, said the company has "urged Michigan officials to consider effective, cost-saving alternatives" such as a disease management program. Pfizer is participating in such a plan in Florida (Gold et al., Wall Street Journal, 12/3).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.