Senate Approves Measure To Allow States to Extend Medicaid Rx Drug Discounts to Additional Residents

The Senate yesterday voted 56-43 to approve a measure that would allow states to use the purchasing power of their Medicaid programs to negotiate prescription drug discounts for residents who would not otherwise qualify for Medicaid, the Boston Globe reports (Kirchoff, Boston Globe, 7/19). The measure was proposed by Sen. Deborah Stabenow (D-Mich.) as an amendment to a generic drug bill (S 812) that the Senate is using as a vehicle to address several prescription drug issues, including a Medicare drug benefit. The measure would grant states the authority to provide discounts they negotiate with pharmaceutical companies on prescription drugs in their Medicaid programs to residents who earn too much to qualify for the programs but not enough to pay for prescription drugs. In addition, the measure would allow states to negotiate larger discounts than Medicaid law requires and add prescription drug formularies to their Medicaid programs (Lueck, Wall Street Journal, 7/19). The measure would allow states to extend Medicaid prescription drug discounts to millions of additional residents, the New York Times reports (Pear, New York Times, 7/19). "Solutions to higher prescription drug prices are not just in Washington. ... They're in capitals all across the country," Stabenow said (Wall Street Journal, 7/19).

The Pharmaceutical Research and Manufacturers of America, which has filed suit to block similar prescription drug discount programs enacted in Maine, Vermont, Florida, Michigan and other states, opposes the measure (New York Times, 7/19). According to PhRMA President Alan Holmer, the measure would "put state bureaucrats, not doctors, in charge of medical decisions for Medicaid patients and would force Medicaid patients to the back of the line when it comes to state of the art medicines" (Wall Street Journal, 7/19). Some lawmakers also criticized the measure as an effort to "demonize" pharmaceutical companies, pointing out that they spend billions of dollars on research and development of new treatments. "This is a clear example of price controls. We are essentially going to be plucking the feather, quite aggressively, of the goose that's producing the life-saving drugs," Sen. Judd Gregg (R-N.H.) said.

In related news, the White House yesterday issued a statement of administration policy opposing the generic drug bill the Senate is using as a vehicle for the other prescription drug-related proposals (Boston Globe, 7/19). The legislation, sponsored by Sens. Charles Schumer (D-N.Y.) and John McCain (R-Ariz.), would amend a provision in the 1984 Hatch-Waxman law that allows brand-name drug companies to receive an automatic 30-month patent extension from the FDA when they file a lawsuit against generic drug makers for alleged patent infringement. The bill also would prevent brand-name drug companies from paying generic manufacturers to keep their products off the market and would allow generic companies to legally challenge "frivolous patents," including "superficial changes" in a treatment's color or physical design intended only to "stifle competition" (California Healthline, 7/18). According to the statement, the legislation would "complicate the process of filing and protecting patents on new drugs," increase costs and lead to delays in new treatments (Fulton/Rovner, CongressDaily/AM, 7/19). However, the Congressional Budget Office said last night that the legislation would save the nation $60 billion -- which represents 1.3% of public and private spending on prescription drugs -- over the next 10 years. The bill would save the federal government $5.9 billion over 10 years, the CBO said (New York Times, 7/19)

The White House statement also said that a Medicare prescription drug benefit bill proposed by Senate Democrats would require large reductions in other programs and "exhaust the Medicare trust fund early" (Boston Globe, 7/19). The legislation, sponsored by Sens. Bob Graham (D-Fla.) and Zell Miller (D-Ga.), would establish a Medicare prescription drug benefit at an estimated cost of as much as $500 billion over eight years. Under the legislation, seniors would pay a $25 monthly premium with no deductible, a $10 copayment for generic drugs and a $40 or $60 copayment for brand-name treatments. The government would cover 100% of seniors' annual out-of-pocket prescription drug costs that exceed $4,000. Low-income seniors would pay reduced premiums, and the bill would exempt Medicare beneficiaries with annual incomes less than 135% of the federal poverty level from premiums and copayments (California Healthline, 7/18). The statement endorsed a less-expensive bill proposed by a tripartisan group of senators (Boston Globe, 7/19). The tripartisan group, which includes Sens. Charles Grassley (R-Iowa), Olympia Snowe (R-Maine), Orrin Hatch (R-Utah), John Breaux (D-La.) and James Jeffords (I-Vt.), has proposed a $330 billion, 10-year bill under which Medicare beneficiaries would pay a $35 monthly premium, and the government would cover 50% of seniors' annual out-of-pocket prescription drug costs up to $2,000 or $2,500, no costs between $2,000 or $2,500 and $3,700, 90% of costs that exceed $3,700 and 100% of costs that exceed $6,000 (California Healthline, 7/18). The statement said that the tripartisan group bill would "provide far more substantial relief for seniors than generic drug legislation." The Senate plans to vote on the rival bills next Tuesday (CongressDaily/AM, 7/19).