New England Tackles High Drug Prices

This article originally appeared in State Legislatures magazine, March 2000, page 9

Two New England states are trying to lower pharmaceutical costs to their citizens through recently passed laws. Massachusetts' FY 2000 budget establishes a new program for discounted bulk or "aggregate purchase" of prescription drugs. It will combine the purchasing power of several groups, including participants in the state's Senior Pharmacy program, state employees, Medicaid enrollees, others for whom the state subsidizes prescriptions and uninsured or underinsured individuals.

The bulk purchase program could cut prices 20 percent or more and help 1.6 million residents, according to Senator Mark Montigny, Ways and Means Committee chairman. Part of the plan calls for the governor's administration and finance secretary to design the program and contract with one or more outside organizations to manage it.

The Maine Resident Low-Cost Prescription Drug Program went into effect in February. Under the law, drug manufacturers who choose to participate pay rebates to the state. Once agreed to, the rebates are in the same amount as federally established Medicaid rebates (currently around 18 percent to 20 percent). When filling a prescription, the consumer picks whatever pharmacy he or she wishes. The pharmacy deducts the discount amount set for products from a participating manufacturer, but otherwise is free to set its own price. All Maine residents who have no prescription drug insurance coverage qualify for the discounts. There are no enrollment procedures, age limits or identification card. Maine pharmacists clarified that all prescription purchases already require an ID such as a driver's license, and a cash payment shows there is no insurance coverage. The program is self-funded by the voluntary rebates, which are paid to the Department of Human Services, and then passed to the pharmacies weekly.

Meanwhile, four northern states are meeting summit-style and looking toward potential multistate action. Gathering initially at the Vermont State House in December, New Hampshire, Massachusetts, Maine and Vermont legislative leaders are playing an active role. "I think this is the most important issue that we can work on together," notes Vermont Senate President Pro Tern Peter Shumlin.

"If regional alliances happen, Congress will get the message and the industry will take notice," explains Massachusetts Senator Montigny. The first meeting got prominent coverage in the New York Times and USA Today. However, pharmaceutical industry spokespeople warned that precipitous state action could be harmful.

"We believe that this should not be handled at the state level. This is a national problem that requires a congressional solution. The last thing we need is a patchwork of, perhaps conflicting, state laws. What we as an industry have advocated is expanded coverage, that relies on diverse resources of health plans," says Jeff Trewhitt, lobbyist for the Pharmaceutical Research and Manufacturers Association.

For more information:

in Massachusetts call Senator Montigny's office at (617) 722-1481
in Maine call Jane Orbeton at (207) 287-1670
To read about proposals in other states, see NCSL's Web site at www.ncsl.org/programs/health/drugdisc.htm

Author: Richard Cauchi, Senior Policy Specialist, Health Care Program-Denver

web address: www.ncsl.org/programs/health/drugne.htm