Congress OKs restrictions on medicines for poor States could insist on cheaper options

June 27, 1993|By John Fairhall | John Fairhall,Washington Bureau

WASHINGTON -- Faced with skyrocketing prescription drug costs in the Medicaid program, the White House included in its deficit reduction legislation an unpublicized provision that would deny poor patients some expensive medicines.

The controversial step raises fresh questions about the administration's health care reform goal of providing prescription drug coverage to all Americans.

The provision, contained in the legislation passed early Friday by the Senate, gives states -- rather than doctors -- authority to decide which medicines Medicaid patients can receive. State officials could deny payment for a drug prescribed by a doctor if the state health department had determined there were cheaper alternatives.

The measure would effectively repeal a 1990 federal law that prohibited such restrictive drug policies because of complaints by doctors and advocates for the poor that states were cutting off access to worthwhile but expensive drugs.

Patient advocates, doctors and drug companies charge that lifting the prohibition will hurt poor patients.

"Restrictive drug [programs] . . . could jeopardize the treatmen of cancer in children in many ways," warns James R. Kitterman, the executive director of the Candlelighters Childhood Cancer Foundation.

But state officials and others deny that poor patients would suffer.

"They can save money without negatively affecting quality of care," says A. J. Henley, the chief executive officer of a Philadelphia group health program serving Medicaid recipients.

In the 1980s, when states still had the power to impose restrictions, California eliminated one-third of the 100 drugs most-prescribed nationwide, the Pharmaceutical Manufacturers Association told a congressional panel in April. And Florida officials denied payment for haliperidol, a drug that could have helped schizophrenic patients stay out of the hospital, says Frank Burgmann, vice president of the National Depressive and Manic Depressive Association.

The administration is seeking to end the 1990 prohibition even as it is preparing a reform plan that would guarantee prescription drug coverage to all Americans.

But the government's experience with the Medicaid program -- in which drug costs shot up 17 percent a year from 1988 to 1992 -- illustrates how difficult it could be to control the cost of this benefit.

Administration analysts estimate that it would cost as much as $10 billion a year to provide drug benefits to the 34 million elderly Americans in the federal Medicare program, who now pay for medicines. It's not known how much it would cost private industry to cover workers, almost nine out of 10 of whom already have some drug benefits, according to a consulting company, Lewin-VHI Inc.

Another troubling issue, says Rep. Edolphus Towns, a New York Democrat who recently held a hearing on Medicaid drug restrictions, is that they undermine a basic principle of the administration's reform plans: "the notion that low-income people should receive the same standard of care as those Americans who are more affluent."

Administration officials have been publicly silent on the issue. A White House spokesman says he doesn't know who asked Congress to adopt the new policy for Medicaid drugs. But the president will have to address it in his health reform legislation, expected in September.

The administration had been hoping to present a plan encompassing all Americans from the start, but the high costs of doing so have doomed that. Medicaid will probably remain a separate program, with benefits and rules different from everyone else's -- including state-by-state drug restrictions.

Minority groups dismayed

Minority and children's groups are especially upset by Medicaid restrictions because many of their members are Medicaid beneficiaries. They also fear a loss of drug choice even though individual responses to medicines vary.

"Should my state be allowed to tell my practitioner that a %J particular anti-hypertensive drug which works best for African-Americans cannot be used?" asks C. Alicia Georges, president of the National Black Nurses Foundation.

The cost of drugs in Medicaid reached $6.5 billion last year, including $116 million in Maryland, as a result of the rising price of medications and an increase in the Medicaid rolls to 31 million people.

Many states, which share the cost of Medicaid with the federal government, sought to control spending by drawing up lists of approved drugs and excluding some expensive ones.

When Congress enacted the prohibition in 1990, lawmakers sought to help control costs by requiring that drug companies give discounts in the form of rebates. The rebates -- expected to total $1.4 billion this year -- are based on the volume of sales of medicines used by Medicaid patients.

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