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State paddles hard in a flood of drug costs

By Kate Long

"When you're talking about prescription drug prices, the best thing a state can do right now is to help get those generic drugs onto the market," said Jerry Flanagan.

"The second-best thing is to create a very big purchasing pool that everybody can be a part of."

West Virginia is doing both of those things.

Flanagan specializes in health insurance issues for the Foundation for Taxpayer and Consumer Rights. He seconds the views of the U.S. Public Interest Research Group (U.S. PIRG).

U.S. PIRG recommends that states (1) establish bigger prescription drug buying pools for government, business and individuals, (2) increase people's access to generic drugs, and (3) use preferred drug lists to steer people away from high-priced drugs that are no more effective than lower-priced drugs.

It feels good to hear national advocates urging states to do things West Virginia is already doing, said Ann Stottlemeyer, Commissioner of the Bureau of Senior Services.

"For the past three years, we've done everything we could," she said, "but it's such a huge problem that we can't fool ourselves that we can solve it on the state level. Until it's addressed from a national viewpoint, there's only so much the states can do."

The state appears to be ahead of the curve.

  • Tom Susman, director of the Public Employees Insurance Agency, has created a multistate group that plans to buy prescription drugs together. That buying group — which has attracted positive national attention — will get much better discounts and rebates than each state can get alone. Their combined populations make a formidable buying group. They hope to begin buying in the spring.
  • Four states, including West Virginia, have saved millions by using the same administrators. In three years, Susman estimates that West Virginia will save $25 million on administration alone.
  • More states want to join, Susman said. "If it does well, we eventually want to open it to small businesses too."

  • Susman has significantly expanded state employee use of generic drugs — and saved the state money — by eliminating the co-pay on generics for PEIA and the Children's Health Insurance Program.
  • Attorney General Darrell McGraw has filed or signed onto five lawsuits against pharmaceutical companies for conspiracy to keep low-priced generic drugs off the market.
  • Typically, a company that owns a patent pays the company that makes the generic to keep their product off the market.

    Several such lawsuits have been settled for millions of dollars. "The drug companies are on notice that this conduct will be challenged by the states, even if federal enforcers take no action," McGraw said.

  • PEIA and the Children's Health Insurance Program (CHIP) use preferred drug lists to screen out high-priced drugs that have lower-priced therapeutic equivalents. In 2003, West Virginia adopted this approach for its Medicaid program also. Teams of medical professionals create the preferred lists. Pharmaceutical companies tend not to like these lists, especially when their drugs are not included.
  • Thanks to a major bush-beating effort on the part of many state departments, the enrollment in the Children's Health Insurance Program is so high that only 6 percent of the state's children have no health insurance. All children covered by CHIP have prescription drug coverage.
  • Stottlemeyer comes back to the fact that health-care costs — including prescription drug prices — are expected to double within five years.

    All these things, however helpful and necessary, are fingers in the dike, she said. "We need major change."

    She is less than thrilled with Congress' Medicare proposals for seniors. "The prescription drug parts won't do anything for seniors 'til 2006, and even then, they have huge holes in coverage, with large co-payments. A lot of people in West Virginia won't be able to afford it."

    Sen. Jay Rockefeller — one of eight Medicare conferees — also has major problems with both bills. Neither regulates the price of prescription drugs. Consumer advocates describe both as a "windfall" for pharmaceutical companies.

    Rockefeller, D-W.Va., called the Senate bill a scam and said it is "cynical and disingenuous." It sets no national premium and leaves private insurance companies free to decide what they will charge from region to region. It sets no standard benefits.

    It leaves a big gap in coverage: After a senior spends $4,500 on drug costs, coverage stops until the senior spends $5,800.

    Rockefeller favors allowing Americans to buy drugs from Canada. Though both the Senate and the House passed "re-importation" bills, those bills are stuck fast in committee with no signs of movement, advocates say.

    This is not logical, Stottlemeyer says. But national patient advocates point out the fact that the pharmaceutical industry employs more than 600 lobbyists in Washington alone and donated about $25 million during the 2002 campaign cycle.

    About 23 percent went to Democrats and 75 percent to Republicans. PhRMA, the industry lobbying group, has upped its lobbying budget by 23 percent for 2003-2004, according to internal PhRMA documents obtained by the New York Times.

    They make it more complicated than a complicated subject needs to be, Stottlemeyer says. She goes back to the Federal Supply Schedule and Veterans Administration prices. "Medicare should negotiate prices comparable to what the VA pays for prescription drugs, then provide prescription drugs for seniors that way," she said. "It's the only thing that makes sense."


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