Hawaii combats In the strongest challenge yet in the battle between states and manufacturers and distributors of prescription drugs, Hawaii, eight other states and the District of Columbia are organizing a joint, nonprofit operation to manage their prescription plans, officials in charge of the effort said.
high cost of drugs
The isles join 8 states in an effort
to increase prescription benefitsStaff and wire reports
The states intend to hold down spending on medicines for millions of state employees and Medicaid beneficiaries by creating an organization designed to be immune to drug makers' promotions of many of their more expensive products.
The new organization is being formed at a time when two-thirds of the states are reducing Medicaid coverage, restricting eligibility or ending benefits altogether for at least 1 million people.
A study by the Kaiser Family Foundation said that state Medicaid directors expect further cuts in benefits and eligibility.
A drug benefit manager would try to help Hawaii and the other eight states -- New York, Maine, Massachusetts, Connecticut, Rhode Island, Vermont, New Hampshire and Pennsylvania -- maximize the drug benefits they can provide given their current budget constraints.
Hawaii's involvement in the initiative may be affected by a case to be argued later this month before the U.S. Supreme Court and by the recent change to a Republican state administration.
The state Legislature passed a law last year providing for state-sponsored bulk-buying of prescription drugs, but Gov. Linda Lingle was critical of the measure during her campaign. No one from the Lingle administration could be reached last night to discuss Hawaii's involvement in the joint effort of states.
"There is no question that the larger the purchasing pool, the better position states would be in to negotiate lower prices," said former Health Director Bruce Anderson last night. "As a small state, we have very little leverage."
The Hawaii law is based on a Maine program that has been put on hold while it is appealed to the U.S. Supreme Court.
It and another new Hawaii law making more people eligible for lower Medicaid drug prices mirror Maine's two prescription drug plans, which are the focus of legal challenges from the Pharmaceutical Research and Manufacturers of America, representing the drug makers.
Lingle criticized the new laws as consumer measures with no immediate impact for consumers.
Lingle told the American Association of Retired Persons in a campaign appearance that she suggested that the state negotiate drug prices with pharmaceutical companies and approach health maintenance organizations about buying drugs on behalf of the uninsured.
A federal appeals court in Washington, D.C., struck down last week the Healthy Maine Prescriptions program that provides drug discounts through the federal Medicaid program.
State Rep. Roy Takumi (D, Pearl City-Pacific Palisades), an architect of the Rx Hawaii and Healthy Hawaii programs, acknowledged last month that the court cases are a setback. Takumi said the state Department of Human Services has hired a consultant to draft the request for a Medicaid waiver and anticipates qualified residents could begin signing up by next fall. The Healthy Hawaii program allows residents who earn 300 percent or less than the federal poverty level, or about $42,200 for a family of two, to qualify for Medicaid prices.
Dozens of states are facing their largest deficits in years. Their combined shortfall for the current fiscal year is estimated at $45 billion, with some state deficits reaching 20 percent, and the collective deficit is expected to increase sharply next year.
Health care spending is a major part of the financial problems the states face, and drugs are the fastest-growing component.
Drug benefits for the state employees and Medicaid recipients in most of the states in the nonprofit plan are currently managed by private companies called pharmacy benefit managers.
Under their current contracts, these drug plan managers collect sizable payments, known as rebates, from drug makers in return for promoting certain drugs.
They then create lists of drugs for different ailments, called formularies, and often set prices that encourage drug plan members to opt for the drugs that have been promoted.
At least three of the largest drug benefit managers, Medco Health Solutions, AdvancePCS and Express Scripts, have special deals with drug manufacturers that require them to create financial incentives for Medicaid recipients to use certain prescription drugs, many of them quite expensive.
By managing their drug benefit programs themselves, the states intend to keep any drug company payments for themselves.
They plan to use medical experts to help them determine the most cost-effective and appropriate drugs to offer, which may supplant the ones promoted most heavily by drug makers.
Some states, including New York, have never had a preferred drug list for Medicare recipients.
Richard Gottfried, chairman of the New York state Assembly health committee and a member of the legislative association planning group for the new drug plan manager, said the state could generate "enormous savings" by selecting a list of preferred drugs and obtaining discounts for Medicaid and other health care programs for women and children.
The New York Times and Star-Bulletin reporter Mary Adamski contributed to this report.
State of Hawaii
