The failure of Congress to provide relief from escalating prescription drug prices has galvanized lawmakers’ attempts in many states to blunt the effects on consumers, and New England is leading the way.
Earlier this month, key lawmakers from all six states promised to step up their efforts since a Senate vote July 31 that rejected a long-promised plan to add a prescription-drug benefit to the Medicare program.
"Here we are two years after the 2000 election and nothing has been done," said Lt. Gov. Charles J. Fogarty, a Democrat and chairman of Rhode Island’s Long Term Care Coordinating Council. "Seniors are looking for results, and we at the state level are doing the best we can to pick up the slack."
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Fogarty and state Rep. Steven M. Costantino (D-Providence) and state Sen. Thomas J. Izzo (D-Cranston), are members of the Northeast Legislative Association on Prescription Drug Prices, which states formed in 1999 to work jointly on the issue of soaring prescription-drug prices.
The group – a consortium of the six New England states, New York, Pennsylvania and the District of Columbia – met Aug. 1 in South Portland, Maine, one day after the Senate rejected a plan to add a prescription drug benefit to the Medicare program.
"We think there’s little chance that Congress will truly fight for fair prices," said Vermont State Sen. Peter Shumlin, who is the chairman of the Northeast Legislative Association on Prescription Drug Prices. "We believe the states are going to be the incubator for change."
From Maine to Connecticut, the six New England states are putting more pressure on pharmaceutical companies than any other region, through legislation that seeks to tame drug costs, especially for seniors.
Fogarty said Rhode Island expanded the Rhode Island Pharmaceutical Assistance to the Elderly (RIPAE), which provides subsidies for low-income seniors to purchase prescription drugs. Legislation passed this year opened the program to some disabled residents and expanded the list of discounted drugs available for RIPAE members.
Some states in the association, however, have been more aggressive in their efforts to cut drug costs – and in doing so have made themselves the target of lawsuits brought on by the pharmaceutical industry. A lawsuit over a Maine law requiring drug companies to offer discounts to seniors now is pending before the U.S. Supreme Court.
Vermont could be next on the industry’s radar. Last month the state passed a controversial bill that would establish a "preferred drug list." The law will create predetermined lists of "clinically equivalent" drugs for each therapeutic category. To get on the list, drug manufacturers must agree to sell medicines at deep discounts.
Vermont says the list is a way to protect its Medicaid budget from spiking drug prices, while providing Medicaid patients with better access to medicines.
"Essentially we’ll be telling Pfizer or Merck or whoever, ‘Hey, give us the best price you can for these drugs, and you’ll get our business,’" Shumlin said.
But drug companies say that state Medicaid programs already get the lowest prices of any purchasers in the country, and allowing them to negotiate for even lower prices is a violation of federal Medicaid laws. The industry’s trade group, the Pharmaceutical Research and Manufacturers of America (PhRMA), already has sued Michigan and Florida for passing similar laws, and it recently sued the federal government for allowing states to proceed with preferred lists.
"(States) are already getting the absolute best price, and now states are attempting to extract additional discounts by holding Medicaid patients hostage," said Jeff Trewhitt, a spokesman for PhRMA.
A federal law requires pharmaceutical companies to offer supplemental rebates to state Medicaid programs, which results in states getting the best possible price for medicines.
The drug industry says preferred-drug lists not only run counter to the federal law, but it chokes access to prescription drugs for Medicaid patients. PhRMA maintains that by comparing pharmaceuticals on price alone, older drugs will be placed on lists instead of newer, more-effective drugs that are priced higher because they were more expensive to develop.
"Medicaid patients are then forced to settle for older, less effective drugs instead of drugs that their doctor believes would work best for them," said Bruce Lott, another PhRMA spokesman. "It puts bureaucrats and bean counters in charge of prescribing medicines."
Vermont’s efforts are particularly unnerving for the pharmaceutical industry, because the state plans to extend the preferred list to private buyers of drugs such as HMOs and other insurers.
Despite the almost certain likelihood of a lawsuit against the state, Shumlin is undeterred. He said it is the Northeast association’s goal to have each member state pass preferred list legislation.
"We expect Rhode Island will join shortly," he said.
Rhode Island’s state Medicaid program has felt the sting of rising drug prices. The state spent $95.4 million on prescription drugs for Medicaid patients in fiscal year 2002, which ended June 30. That is up from $79.8 million in 2001 and $68.8 million in 2000.
When asked if preferred-list legislation is a good idea for Rhode Island, Fogarty said that he is undecided on the issue. He said, however, that he expects the issue eventually to make its way into the General Assembly.
"I don’t think we want a knee-jerk reaction and (introduce legislation) just because someone else did," Fogarty said. "We can’t have insurers or states practicing medicine."
Although Rhode Island’s efforts have not been as controversial as those of Maine or Vermont, lawmakers did push through during this year’s legislative session a few bills aimed at making medicine more affordable for seniors.
A bill put forth by Fogarty and Sen. J. Clement Cicilline, a Newport Democrat, allows low-income people ages 55 to 64 who are on Social Security Disability Insurance – or roughly 4,300 Rhode Islanders – to buy medicines at the same discounted rate as RIPAE members.
And a provision in the state budget for fiscal 2003 will expand discounts for RIPAE members on all drugs approved by the U.S. Food & Drug Administration, which will save Rhode Island seniors an estimated $6 million a year, Fogarty said. Before, RIPAE covered only drugs that treat 16 specific illnesses.
Sen. Thomas Izzo, another member of the Northeast group on prescription drug prices, said he also is undecided on the issue of a preferred drug list. He said, however, that he does like the notion of the state working more closely with clinicians on the drugs that are prescribed to Medicaid patients.
Still, Izzo is unconvinced that the problem of rising prescription-drug prices can be solved at the state level.
"In Rhode Island, we’ve made some progress with RIPAE and some proposed waivers that might help some seniors," Izzo said. "But I’m fully convinced that the broader solution has to come through Washington."
In the meantime, look for more states to take action, lawmakers say. At its
Aug. 1 meeting, the northeast association voted to changes its name: It’s now
the National Legislative Association on Prescription Drug Prices.
