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22 States Limiting Doctors' Latitudein
Medicaid Drugs
By
RICHARD PÉREZ-PEÑA
New
York Times, June 16, 2003
In one of the most successful efforts to rein in the fast-rising cost of Medicaid, the government health plan for the poor, states are limiting which drugs doctors can prescribe for Medicaid patients. Two years ago, only three states had authorized the use of lists of preferred drugs for such patients; since then, 19 other states have done so, though not all their programs are up and running, according to the National Conference of State Legislatures. New York State, which spends far more on Medicaid than any other state, is moving toward joining that group, with the Senate and Assembly deep in negotiations over a bill that officials in both houses say could win approval in the week remaining in this year's legislative session. A similar program is under consideration in New Jersey. Preferred drug lists steer doctors away from some of the most expensive drugs and toward different, less expensive ones that the state deems equally effective, a practice that many private insurance companies and employee health plans have adopted and that is being considered by Congress as part of a government-subsidized drug benefit for 40 million Medicare recipients. Such limits have persuaded pharmaceutical companies to lower the cost to states of some medicines. Doctors who want to deviate from the list must get prior approval, a process whose difficulty varies widely from state to state. Medicaid officials in Florida say their program is saving more than $200 million a year, Michigan officials say theirs cut costs by $45 million a year, and some legislators in New York predict annual savings for their state as high as $400 million. Such claims are difficult to judge, because states negotiate below-retail prices and rebates with drug makers but keep those figures secret at the manufacturers' insistence. Health care experts say the potential savings nationally from the use of preferred drug lists, or formularies, could reach into the billions of dollars. It is one of several steps states have taken in recent years to try to control Medicaid costs, including moving recipients into managed care plans. "Containing prescription drug costs is at the top of nearly every state's agenda, and this could be an effective strategy for doing that," said Diane Rowland, executive director of the Kaiser Commission on Medicaid and the Uninsured. "But at the rates costs are rising, even if this effort is very successful, it will do no more than slow the rate of growth." Among the most frequently excluded drugs are widely advertised, high-priced pills like Nexium and Prevacid for acid reflux, and Vioxx and Celebrex for arthritis pain, for which there are no generic versions yet on the market. Several states report that they save more on acid reflux drugs than any other category; Vermont, a state with half as many people as the Bronx, reports saving more than $2 million a year on this class of medicines alone. The states allow easy access to a decade-old class of drugs called histamine 2 receptor antagonists that includes Zantac, Pepcid, Tagamet and several generic and over-the-counter variants. But they are restricting access to most of the newer, more expensive class called proton pump inhibitors. The trend is playing out in thousands of visits like the one a middle-aged woman, suffering from heartburn and acid reflux, recently paid to Dr. John Matthew at his clinic in Plainfield, in central Vermont. She asked for the pills she had seen advertised the night before on television, Dr. Matthew recalled, and not long ago, he would have written the prescription without a second thought. Instead, he explained to her that the state of Vermont wanted him to stop prescribing that drug to people on Medicaid and opt for something less expensive. "She understood, and she was fine with it," Dr. Matthew recalled. "And that, somewhat to my surprise, has been the response from almost all our patients." In fact, in Vermont and a few other states, such programs have been widely embraced, by doctors, consumer groups and others — though not, of course, by pharmaceutical companies. But in other states, Medicaid lists have not been well-received. Patient advocates have even said that a handful of deaths resulted from states' making it too difficult for people to get medicines their doctors thought were appropriate. Michigan has erected some of the highest barriers to the use of popular drugs and to doctors' deviating from the list of approved medicines. Doctors and patients' rights groups there say that the program sometimes poses a real danger to patients who may not respond to a listed drug or who may be taking other medications that interact with that drug. Michigan state officials insist that such concerns are exaggerated and that after some growing pains, the program is working well. "We've made the program more responsive, but keep in mind, we've had a lot to overcome," said Geralyn A. Lasher, a spokeswoman for the Michigan Department of Community Health. "A lot of people know the drug they want when they go into a doctor's office, because they've seen that drug very heavily advertised, and that's the newest and most expensive drug, and they walk out of the doctor's office with it unless there's some reason for the doctor to say no." The pharmaceutical industry has spent heavily on efforts to block the state programs. In the first four months of this year, the industry spent more than $500,000 on lobbying New York State's Legislature, an increase of more than 30 percent over the same period two years ago, and many prominent lobbyists involved have been working to kill or weaken a preferred drug list bill. The Pharmaceutical Research and Manufacturers of America, the industry lobbying group, has sued unsuccessfully to block the programs in Michigan and Florida. The industry group did not respond to three telephone messages left last week requesting an interview. But in past statements and in court papers, the group has said that restricting access to prescription drugs means worse health care and that states should be required to win federal approval for their programs. Prescription drug costs are the fastest-rising part of Medicaid, which is paid for by the federal government, the states and, in some states like New York, by local governments as well. The tab for Medicaid drugs doubled in just four years, reaching $23 billion last year, and accounted for one of every 10 dollars the program spent on health care. Unlike many cost-saving plans that appeal mostly to conservatives, the move toward preferred drug lists has cut across ideological lines, as even many lawmakers on the left see it as a way to save money at the expense of big drug companies, not patients. "This is going to happen in some fashion, so rather than opposing it, I believe we should make sure it happens the right way, with all the needed patient protections," said Richard N. Gottfried, the Democratic chairman of the New York Assembly's Health Committee, who has introduced a preferred drug list bill that mirrors Vermont's program. Included in the budget bills the Legislature enacted last month, over Gov. George E. Pataki's vetoes, was a provision requiring legislation for any preferred drug list program — a measure intended to head off a bid by the Republican governor to establish a strict program on his own. Several consumer and patient advocacy groups in New York support Mr. Gottfried's bill. But others on the left, including some advocates for the mentally ill and some Democratic legislators, remain opposed to any preferred drug list program, fearing results more like Michigan's than Vermont's. Assemblyman Peter M. Rivera, a Democrat from the Bronx who is chairman of the mental health committee, has predicted that many doctors will settle for less-than-optimal medicines, rather than taking the time and trouble to fight for patients, and that doctors and patients who speak limited English will find it especially hard to navigate a prior approval system. States restricting the use of drugs under Medicaid have started with a review board that divides the available drugs into "therapeutic classes" — one for heart disease, one for diabetes, one for bacterial infections, and so on. In each class, the panel designates the most effective drugs, usually two per class. Those medicines, and any others that are as affordable or more so, win a place on the preferred lists, and drugs that cost more are excluded. Some pharmaceutical companies have offered states new rebates on excluded drugs, lowering the effective price, to get them on the lists. A doctor who wants to prescribe a drug that is not on the list can petition a state office or a private contractor hired by the state, called a pharmacy benefits manager. Some states require time-consuming phone calls or paperwork for prior authorization, or have difficult procedures for appealing the denial of a drug. At the other end of the spectrum, in states like Vermont, the phrase "prior authorization" is a misnomer, because the decision always rests with the doctor. Even so, doctors, pharmacists and state officials say compliance with Vermont's list is very high. "My shop used to go through about 100 tablets of Protonix a week and 1,500 capsules of Prilosec," said Richard Harvie, a pharmacist in Montpelier, referring to two common acid reflux drugs. "Then, Protonix made the preferred list and Prilosec didn't, and pretty soon it switched to about 30 Prilosec a week and about 1,000 Protonix." Copyright
© 2002 Global Action on Aging
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