Pharmaceutical Bulk Purchasing
Multi-state and Interagency Plans
Prescription drug costs and access continue to have a substantial impact on state budgets and state decision making. One strategy that has attracted growing attention is the idea of bulk, "consolidated" or "aggregate" purchasing of pharmaceuticals, designed to achieve a lower price for all those included. Since 1999, when Massachusetts enacted authorization for an ambitious statewide bulk Rx plan, a growing number of states, agencies and organizations have implemented, explored or promoted bulk purchasing. This web-based report provides an overview and links to laws, activities and analyses of this approach.
Periodic major news stories proclaimed "Purchasing Pools Let States Buy in Bulk, Save on Medicaid," "States Organizing a Nonprofit Group to Cut Drug Costs" and "Feds OK Prescription Drug Pools." Behind the headlines are almost 20 years of exploration, studies and lawmaking by state legislators and agencies, from West Virginia to Maine and New York to Alaska.
Operational Programs at a Glance: As of mid-2018, there are five operating multi-state bulk buying pools, not counting several additional variations and single state-initiatives: The first three pools are focused on state Medicaid drug purchases. (Links lead to details within this report)
1) The "National Medicaid Pooling Initiative" (NMPI was first announced in early 2003 with four states. As of mid-2018 ten states plus D.C. participate. The states are Alaska, Kentucky, Michigan, Minnesota, Montana, New Hampshire, New York, North Carolina, Rhode Island, and South Carolina as well as the District of Columbia.
2) Top Dollar Program (TOP$)SM is a separate state Medicaid pharmaceutical purchasing pool also started by Provider Synergies. It began with Louisiana and Maryland in 2005. There are six member states: Connecticut, Idaho, Louisiana, Maryland, Nebraska and Wisconsin, as of June 2018.
3) The Sovereign States Drug Consortium (SSDC) was founded as a non-profit structure in October 2005 by the states of Iowa, Maine, and Vermont for Medicaid purchases. Delaware, Iowa, Maine, Mississippi, North Dakota, Ohio (joined 2017), Oklahoma, Oregon, Utah, Vermont, West Virginia and Wyoming are operational members as of June 2018.
4) The Northwest Prescription Drug Consortium (NPDC) combines non-Medicaid Rx discount programs, open to the public in Oregon and Washington; it began n 2007.
5) The Minnesota Multistate Contracting Alliance for Pharmacy (MMCAP), was founded in the mid-1990s and combines state and some local agencies and clinics in 49 states. It does not serve Medicaid or public employee programs.
See details, history, links and new developments in the narrative below.
- Supplemental Rebates by State: NCSL's April 2017 State Legislatures Magazine featured an article "Increases in Drug Spending Slow" that included a description of Medicaid rebates and an updated map of the state-initiated supplemental rebates, reproduced below:
National Medicaid Pooling Initiative (NMPI)
The "National Medicaid Pooling Initiative" for prescription drugs, was founded in 2003, aimed at lowering costs in their Medicaid programs. For 2018, the program includes 10 participating states and the District of Columbia. NMPI had 3.8 million lives under contract. and has supplemental rebate agreements with more than 90 pharmaceutical manufacturers. The NMPI Website and program is administered by Provider Synergies LLC, a wholly-owned subsidiary of Magellan Health Services.
As of May 2018 these states are participating in the NMPI program: (alphabetical order)
A brief history: In February 2003, three states, Michigan, Vermont, and South Carolina announced the formation of NMPI. Led by Michigan Governor Jennifer Granholm, "the states want to tap into multistate prescription drug-buying power to save Michigan and its recession-battered budget as much as $50 million. We expect to cut tens of millions of dollars from our Medicaid drug costs this year," Granholm said. Six other states joined, but have since withdrawn; they are listed under "no longer a member" below. The original operational member states were Michigan and Vermont, plus Nevada, Alaska and New Hampshire added soon after approval by HHS in April 2004 (all based on State Plan Amendments filed in 2003). At the time, HHS Secretary Tommy Thompson's release stated: "This is the first time in the history of the Medicaid program that states have worked together in this manner.... By using the proven technique of negotiating lower prices, states will reap important savings on their drug costs." "The ability to purchase drugs at a lower cost will help states continue to provide critical medications to the millions of low-income citizens who depend on the Medicaid program." The CMS approval notices starting in 2004 formalized an additional name for the pool: "Michigan Multi-State Pooling Agreement" (MMSPA). In all cases the approvals include implementation of "supplemental rebate agreements for Medicaid recipients."
NMPI NOTES: (1) New York, in April, 2009, in April 2009, voted to discontinue "participation in the National Medicaid Pooling Initiative to allow the State to negotiate supplemental rebates directly with manufacturers ($1.8 million), and others. The budget agreement authorizes DOH to negotiate directly with drug manufacturers to secure better rebates on prescription drugs. Before the implementation of this program the ability to secure rebates was limited to drugs included in the State’s preferred drug program which limited both the number of drugs and amount of the rebate the state could get. This new authority will use Medicaid’s significant purchasing power to secure deeper discounts on prescription drugs already on the preferred drug list and expand the rebate program to additional drugs. When fully implemented in two years, additional savings from rebates are expected to be over $167 million." October 3, 2011 - According to Steve Liles, Senior Director of Value-Based Purchasing with Magellan Health Services, "New York is still participating in the NMPI. The state is carving out the pharmacy benefit into managed care organizations for about 75 percent of their recipients, but they will continue as a member of NMPI for their remaining fee-for-service recipients. Unlike other NMPI states, New York does contract with a select number of manufacturers (manufacturers not contracted through the NMPI) through a single-state Supplemental Rebate Agreement."
In 2006, the NMPI pooled purchasing program (with nine states) covered approximately 3.5 million lives, with purchase costs of about $5 billion annually; with New York added this doubled to about 8 million lives and $10 billion annually (2007). In other relationships:
- In February 2010 Pennsylvania was negotiating for HHS approval to allow the PACE senior Rx assistance program, to join NMPI. They report, "If approved, PACE rebates increase by 30% — which translates to $15 million in savings." [report]
South Carolina withdrew their State Plan Amendment from CMS last fall due to "bureaucratic delays at CMS", although they are negotiating what are termed "state-only" rebates via First Health Services.1
Vermont's first State Plan Amendment #03-15 was approved (retroactive) 7/1/03; the state reported that its Medicaid program saved $1 million in 2004 because of the purchasing pool. VT announced a switch to the Sovereign States Drug plan, effective Jan. 1, 2006.
- NMPI Drug List: 2018 Product Category Listing | Effective April 1, 2018, 32 pages, (alphabetical by treatment category)
TOP DOLLAR ($) - State Medicaid Pharmaceutical Purchasing Pool
Louisiana and Maryland jointly formed a buying pool organized by Provider Synergies, a PBA, under a proposal submitted to the Centers for Medicare and Medicaid Services in mid-December 2004, and approved in May 2005. Connecticut, Idaho, Nebraska, Pennsylvania and Wisconsin joined in more recently. "These pooling plans will help lower drug costs for the states involved," former HHS Secretary Leavitt said at the time. "The ability to purchase drugs at a lower cost will help the participating states continue to provide critical medications to the millions of low-income citizens who depend on the Medicaid program."
In 2015 managers declared, "Provider Synergies has been very successful in managing PDLs and negotiating rebates for over 7 million lives with drug expenditures of approximately $8 billion." Earlier HHS stated that Louisiana estimates that it will save $27 million in its Medicaid program in 2006 as a result of the arrangement. Maryland reports that its Medicaid program saved $19 million in 2006 because of the purchasing pool, while West Virginia expected to save $16 million. Altogether, the pooled purchasing program will cover over 1.3 million beneficiaries. Although the states are pooling their efforts in buying drugs, they all will maintain their own preferred drug lists and exercise clinical oversight of those lists to assure adequate access to needed medicines for their beneficiaries. Because there are overlaps on the preferred drug lists, pooling across states can lead to larger discounts on certain drugs." In a July 2006 interview with a Provider Synergy official, the company stated that a state with an existing PDL that joins the TOP$ multi-state pool typically gains 10 percent additional savings.
West Virginia joined in 2005; their State Plan Amendment was approved 5/05. The state withdrew effective January 1, 2008. While a member they estimated the state would save $16 million in 2006. West Virginia Department of Health and Human Resources analysis, 2006 "Non-preferred drugs in classes where the Prior Authorization (PA) Process has been activated have incurred a 92% prescription volume shift to preferred agents."
Sovereign States Drug Consortium (SSDC) -
Includes 12 states: Delaware, Iowa, Maine, Mississippi, North Dakota, Ohio, Oklahoma,Oregon, Utah, Vermont, West Virginia, and Wyoming for 2018.
The Sovereign States Drug Consortium (SSDC) is the first state-administered multi-state Medicaid supplemental drug rebate pool. In contrast to vendor-administered pools which are “owned” by the vendor, the SSDC is entirely owned by the participating states. One of the key components to the SSDC is that any state can participate regardless of whether it administers its Medicaid pharmacy benefit through internal or contractual resources.
The SSDC received approval from the federal Centers for Medicaid and Medicare Services (CMS) on July 20, 2006. Each state in the consortium has its own PDL. Preferred products may be generics, low cost brands, or higher cost brands where the drug manufacturers provide a financial rebate to have their products preferred. In the course of manufacturer rebate procurement, the process is completely transparent. All participating states have access to all bids by pharmaceutical manufacturers; bids are collectively reviewed and states independently decide which approach is most appropriate for their individual programs.
2017-18 Update: North Dakota and Delaware joined the SSDC with North Dakota planning to collect rebates against utilization beginning in July 2015 and Delaware planning to collect against utilization beginning in calendar year 2016. In 2016, the state of Oklahoma joined the SSDC and they have obtained CMS approval as well
||Joined SSDC, effective July 2015
||230,000 PDL lives; $208,000,000 Annual Medicaid Drug Spend (SFY 2014)
State Plan Amendment 05-030 approved by CMS 7/20/06, retroactive to 1/1/06.
Iowa 2017 Supplemental Rebate Agreement
|IA estimated it will save $1.8 million in 2006; the overall plan including PDL and prior authorizations "would save Iowa and the federal government about $11 million a year."
- Dollars saved through the Pharmaceutical PDL (Iowa Medicaid) Program 2/08
||State Plan Amendment 06-002 approved by CMS retroactive to 1/1/06. Updated approval letter 2/2013 | ME 2017 Supplemental Rebate Agreement
||ME announced savings of $1 million between November 2005 and July 2006.
||Joined SSDC in 2012
Mississippi 2017 Supplemental Rebate Agreement
|537,696 PDL lives; $255,943,031 Annual Medicaid Drug Spend (SFY 2014)
||Joined SSDC in 2015, effective January 2016
ND 2017 Supplemental Rebate Agreement
|66,041 PDL lives; $39,215,361 Annual Medicaid Drug Spend (SFY 2014)
||Joined SSDC in 2017
||Joined SSDC in July 2009.
Oregon 2017 Supplemental Rebate Agreement
||State Plan Amendment 07-006 approved by CMS 8/26/07, retroactive to 8/1/07.
Utah 2017 Supplemental Rebate Agreement
|UT estimated $1.5 million in savings in FY 2007; this claim was omitted in CMS's approval of the structural plan.
||State Plan Amendment 06-005 approved by CMS 7/20/06, retroactive to 1/1/06.
- VT AG Report, Dec. 2007
Vermont 2017 Supplemental Rebate Agreement
Vermont reports that for FY 2008 the state received an additional 4.7% (or $5.3 million) in state-negotiated supplemental rebates, using SSDC and the VT PDL. That is on top of the 27.1% from the standard federal Medicaid formula rebate, based on a $112.4 million pharmaceutical budget. [reported 11/08]
||State Plan Amendment 07-10 approved by CMS 5/6/08, retroactive to 1/1/08.
||State Plan Amendment 08-001 approved by CMS 3/18/08,
Note #2- MedMetrics Health Partners, a nonprofit pharmacy-benefits manager started by the University of Massachusetts Medical School, assumed responsibility for the Vermont drug benefits program from the previous pharmacy benefit manager (First Health) effective January 1, 2006.
- Sovereign States Drug website: https://www.rxssdc.org/
- SSDC Fact Sheet - For Interested States, updated 2018
Covered Medicaid Lives and Expenditures for SSDC Member States
||Total PDL Lives
||Annual Medicaid Drug Spend (SFY 2013)
$1,550,555,930 (for 8 states)
The Minnesota Multistate Contracting Alliance for Pharmacy (MMCAP)
MMCAP, formally the Minnesota Multistate Contracting Alliance for Pharmacy, includes 49 states and several cities. It does not include state Medicaid purchasing. The Alliance describes itself as follows: "MMCAP, created in 1985, is a free, voluntary group purchasing organization operated and managed by the Materials Management Division of the State of Minnesota's Department of Administration for government healthcare facilities. MMCAP is a coalition of states and governmental units formed to standardize and consolidate state requirements for pharmaceuticals, supplies and services, and to cooperatively contract for such requirements. MMCAP may offer cooperative multistate contracting agreements for additional health-care related supplies, equipment and services to participating states and facilities (e.g., state correctional facilities, state mental health facilities, public health facilities, etc.). Participating states and facilities reserve the right to utilize or not utilize any MMCAP contracted agreements." According to program staff, MMCAP achieves average savings of approximately 23.7% below AWP for brand name pharmaceuticals and 65% below AWP for generics. (Exact formula for 2003: WAC -2.57% brands; WAC-44% generics). A prime vendor administers the program, handles inventory and delivers awarded contract items. The bulk of savings from the Alliance are described as administrative, including lower inventory levels, lower costs associated with the ordering process and with individual state pharmaceutical contracts. The State of Minnesota oversees the program; "participating states and facilities are empowered to enter into this agreement by Minn. Stat. § 471.59, subd. 10." Effective August 1, 2007, certain non-profits are eligible to purchase from state contracts through the Cooperative Purchasing Venture. This state statute now permits "any entity recognized by another state's statutes as authorized to use that state's commodity or service contracts" to enter into the bulk purchasing consortium. [MN Statute summaries, § 16C.03, Subd. 1 ]. > MMCAP Website [link updated 2/1/2018]
49 States and other members in MMCAP include: AL, AK, AZ, AR, CA, CO, CT, DE, FL, GA, HI, ID, IL, IN, IA, KS, KY, LA, ME, MD, MI, MN, MS, MO, MT, NE, NV, NH, NJ, NM, NY, NC, ND, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VT, VA, WA, WV, WI, WY, and the cities of Chicago IL and Los Angeles CA.. There are over 5,000 separate facilities listed as part of MMCAP as of January 2018. (The only state not participating is Massachusetts)
Cost Effectiveness: MMCAP reports that it achieves average savings of approximately 23.7% below average wholesale price (AWP -23.7%) for brand name pharmaceuticals and 65% below average wholesale price (AWP -65%) for generic drugs. In addition, participating states achieve administrative savings by avoiding the need to establish their own contracts, and also achieve savings through lower ordering costs and inventory levels. In 2008, the MMCAP administration contracted a consulting firm to evaluate the MMCAP’s prices and found them to be lower than prices achieved by the other four multi-state group-purchasing organizations. For example, in a market basket of 413 drugs, MMCAP’s total prices were 2.8% to 4.4% lower than total prices for the same market basket of drugs from the four other group-purchasing organizations. In addition, prices obtained through MMCAP appear to be significantly lower than average wholesale distributor prices, as commonly represented as wholesale acquisition cost in national market research literature. [Report]
MMCAP members and 340B. A recent survey found that 340B prices are approximately 24 percent lower than that available to group purchasing organizations. MMCAP encourages eligible facilities to take advantage of these prices. MMCAP members can order 340B drugs through regular MMCAP ordering processes as all MMCAP distributors participate in the 340B program. Since the 340B program does not cover vaccines or medical supplies, there are incentives for 340B-eligible facilities to join MMCAP and purchase off its contracts. There are several facilities participating in the 340B program that are currently members of MMCAP.
Northwest Prescription Drug Consortium
In July 2006, Oregon Gov. Ted Kulongoski announced the Northwest Prescription Drug Consortium, which began joint purchasing beginning February 2007. It brought together efforts in the two states with the formation of a prescription-drug-buying cooperative to leverage their combined buying power for the uninsured.. Oregon initially launched a purchasing pool for low-income people 55 and older to access below-market price drugs; voters in November '06 expanded it to cover residents of all ages and incomes, including those "underinsured" for some drugs not otherwise covered. A similar plan in Washington began with coverage for residents age 50 and older with income up to 300 percent of federal poverty; it expanded in 2007 to include all residents, regardless of age, income or insurance status. More than 5 million people are eligible for the programs that "will now cooperatively shop for better deals for the two states." An announcement on March 19, 2007, formalized the launch of the two-state benefit program. This is the program description posted for 2014:
Moda Health is the administrator of the Oregon Prescription Drug Program (OPDP) and the Washington Prescription Drug Program (WPDP).
As members of the Consortium, OPDP and WPDP offer significant discounts (on average 42 percent off retail rates) on prescriptions to all Oregon and Washington state residents. Discounts can be accessed through a large network of participating pharmacies including most major chains. The discount programs are similar to a grocery store club card where discounts are taken off at the point of sale.
All Oregon and Washington residents can join the program for FREE and there are no age or income restrictions. All prescription drugs are eligible for discounts. Generally the best discounts are available on generic medications (up to 60 percent off retail rates). There is no required paperwork and it only takes one minute to enroll.
Who can benefit from the discount cards?
Every Oregon and Washington state resident with:
No prescription drug coverage
A high-deductible health plan such as Health Savings Account (HSA). Residents can utilize their discount card when paying down the deductible (just send prescription receipts to your HSA plan)
No insurance coverage
Medical coverage but no prescription drug benefit
Restrictive pharmacy benefits through their employer
How much does it cost?
How do patients learn more and enroll in the program?
Call toll-free at 800-913-4146 or enroll online.
> Oregon residents
> Washington residents
As members of the Consortium, OPDP and WPDP offer significant discounts (on average 42 percent off retail rates) on prescriptions to all Oregon and Washington state residents. Discounts can be accessed through a large network of participating pharmacies including most major chains. The discount programs are similar to a grocery store club card where discounts are taken off at the point of sale.
Benefit manager Moda Health: https://www.modahealth.com/dental/nw_rx_prog.shtml?dn=ods
Source: WA Governor Gregoire Introduces Free State Prescription Drug Discount Card 3/19/07.
Start-Up History: ByAugust 2008, the Northwest Prescription Drug Consortium had enrolled 174,566 uninsured or underinsured residents in the discount program and 224,642 group members in the Rx benefit programs. Residents in OR and WA, who were enrolled in the discount program, saved $12,737,064 since the inception of the program. The savings have almost entirely come from pharmacies, while pharmaceutical manufacturers have mostly not joined in at this time. Generic drugs represented 85 percent of purchases in OR and 82 percent in WA. Among the uninsured/underinsured, in OR 14-16 percent of that population used the discount card monthly, while the figure was 5-7 percent in WA. The Northwest Prescription Drug Consortium negotiations and solicitations have been done in tandem by the Oregon Prescription Discount Program (OPDP) and the Washington Prescription Discount Program (WPDP).
In 2006, the Heinz Family Philanthropies found that Oregon could save up to $17 million a year by changing how the state buys prescription drugs. Oregon's drug purchases, used for state-run programs such as Medicaid, would not be part of the two-state cooperative. The report, produced at the request of the governor, recommended several steps such as consolidating how the state buys prescription drugs, increasing the attorney general's involvement in the process, seeking drug rebates and imposing a preferred drug list for the state's Medicaid program. Back in 2001-2002, legislative resolutions in Idaho and Washington urged joint action with Alaska, Montana, and Oregon to explore "the option of managing prescription drug prices through cooperative strategies with other Northwest states." Wyoming, Utah and Nevada also have participated in discussions convened by the Reforming States Group from an initiative begun in Oregon. As of mid 2008, no decisions or structure had been established for actual purchases for Wyoming, Utah and Nevada. A multi-state meeting of Medicaid managers was called in April 2003, with a focus on developing a common preferred drug list (PDL) that would be available for use by any state program or agency. [see below]
Maine State Employee Pool proposal: In January 2008, Maine Governor Baldacci proposed that a purchasing pool be created among three state employee groups, in order to leverage their purchasing power to lower prescription drug costs.
"Washington State: An Integrated Approach to Evidence-Based Drug Purchasing"
Washington State's Health Care Authority, which coordinates the Prescription Drug Program for the state's Medicaid, public employee, and worker compensation programs, is using an integrated approach to value-based pharmaceutical purchasing. The evidence-based drug review process involves a thorough analysis of quality and effectiveness before applying cost considerations. The process, which includes an evidence-based preferred drug list and supplemental rebates from pharmaceutical manufacturers, is producing savings of $22 million each year to Washington — almost 5 percent of its Medicaid fee-for-service drug spending—and $38 million in combined state–federal spending.
Washington's Therapeutic Interchange Program (TIP) has developed a process allowing physicians and other prescribers to endorse the Washington State Preferred Drug List (PDL), and requires pharmacists to automatically substitute the preferred drug for non preferred drugs prescribed by these practitioners unless the prescription is for a refill of an antipsychotic, antidepressant, chemotherapy, antiretroviral, or immunosuppressive drug, in which case the pharmacist shall dispense the prescribed non preferred drug.
> See: Washington State Health Care Authority Prescription Drug Program | Analysis of Washington PDP by Commonwealth Fund, 4/06
BEYOND DIRECT PURCHASING:
|"Comparative Effectiveness: Better Care or Rationing?"
NCSL Meeting Session: July 21, 2009 , NCSL Legislative Summit, Philadelphia, PA - PowerPoint and speaker resources online [updated 10/22/09]
In the past ten years, at least two multi-state pharmaceutical efforts are focused on cost-effectiveness or cost-savings, but not through direct government purchases.
States Fund the "Drug Effectiveness Review Project (DERP)" to Evaluate Drugs
(NOTE: The "Evidence-Based Project" is not a formal bulk purchasing program, but its origins and goals are closely related to the inter-state pooling programs listed above. It is included here as a convenience to policymakers.
More than a dozen states have joined together to fund a project run by the "Oregon Evidence-Based Practice Center" Project headed by Oregon's former Governor John Kitzhaber in which reviewers examine multiple drug studies to help policy makers purchase the most effective, less expensive medicines. The Drug Effectiveness Review Project (DERP) now includes 12 states: Arkansas, Colorado, Idaho, Minnesota (2014), Missouri, Montana, New York, North Carolina (2014), Oregon, Tennessee (2014), Washington, Wisconsin as of December 2014. The states pay about $75,000 a year for three years to fund the research and gain access to its findings. Head-to-head comparisons of medicines are described as "help states manage $30 billion in annual drug costs."
Eight states are former DERP members: Alaska ('06), California ('06), Kansas ('08), Maryland ('09), Michigan ('08), Minnesota ('08), North Carolina ('08) and Wyoming. The Canadian Agency for Drugs and Technologies in Health also has been a member.
• DERP online details and websites. [Updated June 2018]
The researchers based in Oregon have reviewed more than 30 classes of medicines including migraine pain relievers and cholesterol-lowering drugs. Many of the 237 DERP Final Reports are available online to the public; reports issued after 2013 are proprietary and not available online. [Link updated 2018]
• Oregon Rx official web site
• NorthWest Evidence-based Practice Center (EPC) of OHSU.
• Oregon state "Plan Drug List" used for state and commercial plan evaluation and purchasing. 7/1/07 edition
• (Archive) "Using Evidence-Based Medicine to Design State Drug Programs" - Commonwealth Fund, 2004.
The Medicaid Evidence-based Decisions Project (MED) creates a collaboration among state Medicaid programs for the purpose of making scientific evidence available to states to support benefit design and coverage decisions made by state programs.
The project includes commissioning and access to the following decision making tools:
- High quality systematic reviews of existing evidence
- Technology assessments of existing and emerging health technologies
- A web based clearinghouse
- Support in designing rapid evaluations of products where no evidence exists
- The support of highly qualified research staff to assist members in applying the evidence to their own need
Academic Detailing: Evaluating Generics and Brands Equally
As of 2010 there were at least four state-based programs that provide for objective or evidence-based evaluation and professional and public information about treatment for classes of disease. These include:
- The Pennsylvania PACE/Harvard University Independent Drug Information Service,
- The Academic Detailing Program of the University of Vermont College of Medicine Area Health Education Centers,
- The Oregon Health and Science University Evidence-based Practice Center's Drug Effectiveness Review project (see above),
- The Oregon Attorney General Consumer and Prescriber Education Grant Program (CPGP) was created to educate health care professionals about pharmaceutical industry marketing practices and to provide tools for accessing unbiased sources of information about prescription drugs. The program was funded through the 2004 Attorneys General settlement resolving allegations that Warner Lambert violated state consumer protection laws when promoting Neurontin, an epilepsy drug, for off-label uses., and
- The North Carolina evidence-based peer to peer education program outreach program.
State laws based on "counter-detailing" or academic detailing have been enacted in Maine (2007- HP 638 / LD 839), Mississippi (2004, 2007 -HB 528), Vermont (2004-H. 768) and Massachusetts (S 2650, signed 8/08).
NCSL provides the following links to non-NCSL articles for informational purposes only; content does not necessarily reflect NCSL positions.
ARCHIVE HISTORY AND CHRONOLOGY: REGIONAL AND NATIONAL INITIATIVES:
The National Legislative Association on Prescription Drug Prices (NLARx)
Founded in 2002, the organization described itself as follows: "The National Legislative Association on Prescription Drug Prices is a nonpartisan, nonprofit organization of state legislators from across the country who advocate for lowering prescription drug costs and increasing access to affordable medicines. Legislators from the District of Columbia and all of the New England states plus Pennsylvania, New York, West Virginia, Oklahoma, Texas, Alaska, Arizona, and Hawaii are members of NLARx."
► NLARx web site: http://www.reducedrugprices.org/ [1/2013]
The Early History:
Northeast Legislative Association on Prescription Drug Pricing (NELA)
In late 1999 legislators in six New England states, plus New York and Pennsylvania formed the Northeast Legislative Association on Prescription Drug Pricing to discuss regional and state pharmaceutical activities. A core group met initially in Vermont in December 1999. The Association was formally established at a meeting of legislators in Maine in June 2000, with follow-up meetings held in Rhode Island, New Hampshire, Connecticut, and Massachusetts. In July 2001, participating legislators voted to support a Prescription Drug Fair Pricing Coalition (PDFPC). The proposal stated, in part: "The eight states of the Association could create a joint purchasing coalition to aggregate purchasing power with manufacturers and jointly contract for pharmacy best practice and benefit administration services. The Association's role is to create the concept of the PDFPC and propose a structure for each state's participation. Association member states have approximately 43 million residents representing more than 11% of the United States total population." At an October 2001 meeting, participants also voted to expand the organization to cover up to 22 states. Although the organization has bi-partisan and bi-cameral membership it has members with widely varying views. For example, one dissenting board member, Rep. Mazur of Vermont said, "It appears that NLA is all talk and no action. Slamming pharmaceuticals seems counterproductive because their intense research for newer and better treatment costs billions." NELA was redefined in August 2002, with a new name, NLARx, replacing NELA and bylaws amended to allow for expanded, nationwide membership.
The Northern New England Tri-State Coalition was formed by the Governors of New Hampshire, Maine and Vermont in spring 2000 (separate from legislative leaders, above), "to see if some concerted action among the states could ... help their citizens save money on prescription costs." by aggregating the pharmaceutical purchasing of several populations. They agreed to organize a regional buying pool. The effort was authorized in part by legislation in Vermont and Maine. In October 2000 the three states issued a request for proposals (RFP) to the pharmacy benefits management industry to administer the program. The administrator would negotiate discount prices with manufacturers, with prices expected to be 23 to 35 percent lower than retail.
In May 2001 the Governors announced the details of their plan. According to their statements "the plan calls for the three states to pool the Medicaid money they receive for the 330,000 people they serve that are covered by the government-subsidized health insurance program for the poor and disabled. Through the combined buying power, the states expect to save 10 to 15 percent a year on prescription drugs (compared to previous years). They currently spend $387 million on prescription drugs for Medicaid programs. In addition to buying power, the pool will allow the three states to cut costs in administration of Medicaid funds and in the managing of the types of prescription drugs that recipients take. The states chose First Health Services Corporation of Virginia to manage the pool." The program was planned to be operational in late 2002, but was not implemented because of changes in state decision making.
Pharmacy Working Group and The Rx Issuing States (RXIS), 2003-05; No longer operating
In October 2001, seven states' personnel agencies initially joined in a multi-state purchasing project - the states included Louisiana, Mississippi, Missouri, Maryland, New Mexico, South Carolina and West Virginia. Agency officials from several other southeastern states, including Alabama, Georgia, North Carolina and other observers participated in earlier meetings, the first of which was in Atlanta in March 2001. The group pool proposed was "for more than a million state employees, retirees and their families as leverage to demand steep discounts from drug companies. An August 2001 news article stated, "West Virginia and five other states are preparing to create a multistate drug purchasing pool of Medicaid patients and state employees that would increase their purchasing "clout" and allow them to negotiate discounted drug prices, according to West Virginia Public Employees Insurance Agency Director Tom Susman. He told a legislative committee that "Seventeen other states and the city of Baltimore may also join the pool." The group established a more formal operational arm, known as Rx Issuing States.
By 2005 five states had signed on for the public employee cooperative purchasing -- Delaware, Missouri, New Mexico and West Virginia were the founding members and Ohio joined as of July 1, 2004. Under the name Rx Issuing states (RXIS) they issued an RFP and selected a single pharmacy benefit manager (PBM), ExpressScripts. Together, the initial four-state plan covered 570,000 lives, with estimated spending of $400 million for pharmaceuticals according to ExpressScripts in 2003. With five states, the RXIS covered 700,000 people, with Ohio estimating savings averaging $5 million per year. A central feature is a similar Preferred Drug List among the five states. As for finances, WV estimated $25 million savings over 3 years, or a 5%+ savings over their previous Rx system. The program only served enrollees who already received state health benefits. The Economic and Social Research Institute (ESRI) reported that Missouri expected savings of $1.4 million, or 2 percent of the plan costs, in its first year. New Mexico expected $2.0 million in savings, and Delaware reported $1.9 million in rebates. **
The Rx Issuing States 5-state agreement terminated in 2005, and no longer is operational.
Non-Profit PBM: United Scripts Administrators - no longer operating
In a related initiative, legislators from the nine-state National Legislative Association on Prescription Drug Prices developed a nonprofit group to manage pharmaceutical costs and limit drug makers' ability to sell states their most expensive medicines. In January 2004 it adopted the name United Scripts Administrators. The project chair 2004-05 was former Vermont Senator Peter Shumlin. "The coalition program would cut out the middle-man by taking the place of for-profit pharmacy benefit managers, which many states use to negotiate prices and manage pharmacy benefits for Medicaid recipients and state employees. In 2005, United Scripts Administrators (USA) established a partnership with NW Pharmacy Services to offer the full range of pharmacy benefit management services to states, businesses and others interested in a transparent, nonprofit cooperative PBM. As of 2007 United Scripts Administrators is no longer in operation.
"I-SaveRx" Program Offered Access to Canadian Pharmacies. (2004-2009; no longer operating)
In September 2004, Illinois Governor Blagojevich joined his state with Missouri and Wisconsin to launch "I-SaveRX", a web-based access program that connects states' residents with state-approved pharmacies and drug wholesalers in Canada, Britain and Ireland. Kansas joined a few weeks later. Vermont joined in February 2005. As described, it "promises savings of as much as 50 percent on about 100 prescription drugs. Although coordinated centrally for the four states via a single web site, each state has its own application and publicity.
In October 2005 it was reported that 14,000 prescriptions had been processed during the first year of operation. The program's online portal was www.i-saverx.org, and operated in collaboration with CanaRx Services Inc., which required individuals to agree to its contract terms before use. In acknowledgment of safety issues, the site noted: "The Canadian, Irish, or United Kingdom regulatory bodies have approved all medications available through this program to be safe for use within their own respective countries.... The United States Food and Drug Administration (the FDA), however, has taken the position that the purchase of prescription drugs although from outside of the United States can be unsafe and illegal. To learn more about the FDA’s position, please go to http://www.fda.gov/importeddrugs/ . The State of Illinois, its officers, and its employees make no representation as to the legality of the importation or reimportation of pharmaceuticals from other countries."
Massachusetts Alliance for State Pharmaceutical Buying (MASPB). Begun almost ten years ago, and reinforced by a bulk-purchasing 1999 state law, Massachusetts created MASPB to improve services and lower drug prices through collective purchasing. Pharmaceuticals purchased through the MASPB have been used by state entities for traditional "own-use" governmental functions, such as hospital facilities. Now, with the inclusion of specific multi-state cooperative purchasing language within its solicitations and resulting contracts, "Massachusetts offers other States the opportunity to join." MASPB is supported by Managed Health Care (MHA), the pharmaceutical group purchasing organization for Massachusetts. Although MASPB is similar to the Minnesota Multi-State Contracting Alliance for Pharmacy (MMCAP), it is the only multi-state collective purchasing alliance that uses the services of a professional pharmaceutical group purchasing organization (MHA) to establish acquisition pricing and to provide reporting services. The Massachusetts group expects to get more favorable acquisition prices at a faster rate through the use of MHA. California joined as the second state in 2001. (Description adopted from National Governors Association, 12/01)
Aggregate Purchasing Analysis: Georgia (2001-2005)
In October 2000, the Georgia Department of Community Health contracted with Express Scripts, Inc. (ESI), a pharmacy benefits manager (PBM) to assist with the management of the pharmacy program. The PBM was hired to administer the pharmacy benefits for the 3 DCH plans and the Board of Regents Plan. The PBM also adjudicated the pharmacy claims for all four health plans. The Aggregate Purchasing program began operating in 2001 but ended in 2005.
Costs were controlled through the implementation of several initiatives, including:
a point-of-sale system,
an aggressive maximum allowable cost program,
the most-favored-nations program with improved enforcement,
a three-tiered co-payment strategy applied to a preferred drug list,
an expanded prior authorization program,
a policy of cost avoidance for members with other health insurance
a supplemental drug rebate program
PDLs for each plan, and
a host of other clinical programs
Georgia's Medicaid program spent $1,136,007,007 on prescription drugs in FY 2004 - a 900 percent increase over the last decade. The DCH’s participation in the CMS Medicaid rebate program saved the state more than $260,695,592 in FY2004.
- Source: GA DCH Pharmacy web site, October 2005
A report compiled by the Heinz Family Philanthropies in September 2001 provided these observations about Georgia's Consolidated Drug Purchasing Program:
"Through aggregation of the State of Georgia's programs, a portion of the overall program savings can be attributed to the negotiation of a more competitive financial arrangement with one plan administrator ---- in this case, a PBM selected through a competitive bidding process. Even with aggregate purchasing, it is important to underscore that the majority of the state's savings will be generated from changes in plan design, implementation of an expanded maximum allowable cost (MAC) price list for many generic medications, and the ability to implement consistent preferred drug list and benefit design strategies among a large number of Georgia residents. These savings, however, could also be implemented without aggregation.
As a result of many of these changes, Georgia has realized a reduction in pharmacy cost trends for the Medicaid program of 18% to 25% during the first six months of the new program. Below is a discussion of the various savings opportunities specifically implemented in Georgia that mirror many of the strategies used by employers to manage the increased cost of prescription drug programs.
Plan Design - Georgia anticipates the generation of a high level of savings with the implementation of a new plan design for the State Employees and the Board of Regents. The new plan design will incorporate movement to a three-tier preferred drug list. It will also require a higher level of participant cost sharing for non-preferred medications than was required in the old plan design. Additionally, in July 2001, the State of Georgia Medicaid program became the first Medicaid program to implement a three-tier plan design based on the common preferred drug list developed for the three State programs.
Maximum Allowable Cost (MAC) - The State Medicaid program implemented a more comprehensive MAC list as a basis for the pricing of generic medications. The Georgia MAC list was expanded from 186 to 857 drug products, allowing for more competitive discounts on many generic products than does the federal upper limit pricing, or the state-developed MAC pricing that is in place for many state Medicaid programs today. Georgia projects annual savings of $13 million as a result of its more competitive pricing of generic medications.
Customized Preferred Drug List - The Georgia Medicaid Drug Utilization Review Board coordinated with the PBM to create a customized preferred drug list. The preferred drug list was developed by using the PBM's national formulary as a base, and customizing a list of drugs that specifically meet the needs of the diverse population served by the aggregate purchasing group. Additionally, where appropriate, pharmacy management strategies have been aligned among the programs. Through the application of consistent management strategies and physician education efforts, Georgia anticipates savings from physician prescribing patterns that are consistent with the preferred drug list and benefit design for all programs.
Program Oversight - The State of Georgia created a new agency ----the Department of Community Health---- to provide administration, oversight, and leadership for all state-funded pharmacy programs. The creation of this entity has, and will, contribute greatly to the success of the program. Additionally, much of the success realized by the Georgia program thus far can be attributed to the political commitment and support by the state legislature and the Governor. Such support is critical to overall program success.
In summary, the Georgia representative acknowledged that, with the exception of the negotiated financial arrangement for the commercial programs and the indirect savings associated with application of consistent pharmacy management strategies across all programs, the majority of the cost savings realized will be the direct result of program changes that could have been implemented absent an aggregate purchasing arrangement. They did mention, however, that the benefits associated with the decision to make many of these program changes were maximized due to increased market concentration, and the ability to influence change for a critical mass of participants."
- Source: "Aggregate Purchasing of Prescription Drugs: The Massachusetts Analysis" by Heinz Family Philanthropies, September 11, 2001.