Senate Backs Use of Drug Lists By States in Medicaid Programs

By Sarah Lueck
The Wall Street Journal, July 19, 2002

The language, approved on a 56-43 vote during debate on Senate prescription-drug legislation, would allow states to extend discounts they receive from pharmaceuticals companies on drugs in the Medicaid program to people who aren't eligible for the program but need health-care assistance. States also could negotiate deeper discounts for their Medicaid programs than required under Medicaid law and institute cost-saving measures such as preferred-drug lists, which steer patients to particular medications to cut costs.

"Solutions to higher prescription-drug prices are not just in Washington. … They're in capitals all across the country," said Sen. Deborah Stabenow (D., Mich.), sponsor of the amendment, which has yet to be considered by the House.

Only Florida, Louisiana and Michigan have preferred-drug lists in Medicaid now, but several others would like to adopt the approach. Fear of litigation by the drug industry, which contends preferred-drug lists restrict patients' access to medications, has deterred some states, Sen. Stabenow said.

The Pharmaceutical Research and Manufacturers of America, a drug-industry trade group, sued Bush administration officials early this month to block the Michigan program, arguing that they lacked the authority to approve a price-control program there.

The Senate-passed measure was modeled on a program in Maine, although legal challenges from PhRMA have prevented the state from implementing it. The U.S. Supreme Court recently agreed to hear the case and a decision is expected within the next year.

PhRMA also opposes the Senate-passed bill. "Sen. Stabenow's measure would put state bureaucrats, not doctors, in charge of medical decisions for Medicaid patients and would force Medicaid patients to the back of the line when it comes to state-of-the-art medicines," PhRMA President Alan Holmer said.

Now, lawmakers will debate competing proposals that would provide a prescription-drug benefit through Medicare, as well as an amendment aimed at easing lower-cost generic drugs' entrance into the market.

The White House weighed in on both issues Thursday with a statement of policy opposing the Democrats' main drug-benefit plan and the generic-drug bill. The statement said the drug-benefit proposal, estimated to cost nearly $600 billion over seven years, could result in higher taxes. The administration favors a proposal from Senate moderates, mostly Republicans, that would cost about $370 billion over 10 years. Neither proposal appears to have the votes necessary to pass, but some senators say they are working toward a compromise.