Costs soaring in Pa. drug plan for the elderly

Generous program is popular and largest in the nation

July 25, 2002|By Robert Pear | Robert Pear,NEW YORK TIMES NEWS SERVICE

HARRISBURG, Pa. - Pennsylvania's program to help elderly people buy prescription drugs, the largest in the nation, provides invaluable assistance to tens of thousands of people and is immensely popular, but it also shows the problems that could become endemic if Congress adds drug benefits to Medicare.

The program here costs patients only $6 a prescription and rarely denies coverage. It is financed with proceeds from the state lottery. Despite significant use of generic drugs, however, costs have soared and outstripped revenues.

State legislators know they need to adopt stricter cost-control measures, but, like some members of Congress, they have been virtually immobilized by lobbying on all sides. Neither beneficiaries nor pharmacists nor drug companies are willing to make significant sacrifices.

So the state is desperately seeking new sources of revenue as it considers expanding the program to help more people in need.

Jo Ann H. McCleaf, 67, of Dover, Pa., near York, is just the sort of person whom many state officials want to help. With $11,316 in Social Security benefits and $3,000 of earnings from a part-time job last year, she had income just over the $14,000 limit for Pennsylvania's main pharmaceutical assistance program.

`Can't afford it'

A two-time cancer survivor whose right foot was amputated several years ago, McCleaf said: "I use Lipitor for cholesterol. My legs ache constantly, and I should be taking pain medication every day, according to my doctors. I should also be taking an expensive drug for circulatory problems, but can't afford it."

For Mildred A. Irons, 83, of Linesville, Pa., near Erie, the state program has been a godsend. "If I didn't have it," she said, "I probably wouldn't have any income to live on." For her arthritis, high blood pressure and bladder problems, Irons takes six drugs that cost more than $300 a month. She worries that an increase in her Social Security check, to keep up with inflation, will bump her off the state program.

Pennsylvania is deeply committed to its elderly, who make up more than 15 percent of its population, and the drug assistance program, established in 1984, has strong bipartisan support. The program is widely viewed as a model for other states.

"Everybody likes our program because it's a Lamborghini, a Maserati," said Thomas M. Snedden, the director since 1985.

But it has come to acquire a price tag as hefty as the ones on those elite sports cars.

Since 1997, the cost of the Pennsylvania program has shot up an average of 13 percent a year, to $392.6 million in 2001, while revenues from the state lottery have been flat. Though enrollment has declined, the number of claims for each beneficiary and the amount paid on each claim have steadily increased.

The average number of prescriptions filled for each person in the program now exceeds 3.5 a month, up from 2.5 in 1997 and just 2 in 1987. The state pays an average of $42 for each prescription, up from $27 in 1997 and $14 in 1987.

`The big problem'

"The big problem we have, which causes escalating costs, is utilization," Snedden said. "People are using more and more prescription drug products. If we could get utilization under control, drug prices would not be such a big problem."

The state's experience offers lessons for federal officials struggling to provide prescription drug benefits under Medicare, the federal health insurance program for 40 million people who are elderly or disabled.

Ray Landis, a lobbyist for AARP here, said the situation in Pennsylvania should teach federal officials to be cautious in making assumptions and projections. "In our program," he said, "both utilization and price increases have been much greater than anticipated."

Pennsylvania is second only to Florida in the proportion of its population that is 65 or older. More than 1.9 million of its 12.3 million residents - 15.6 percent - are elderly.

While trying to hold down drug costs, Pennsylvania does not want to alienate drug companies, many of which have operations here. State officials say they appreciate the fact that Merck, Wyeth, GlaxoSmithKline and other drug makers provide many high-wage jobs in the state.

In its pharmaceutical assistance program, Pennsylvania requires use of low-cost generic drugs that have been approved as fully equivalent to brand-name products. Of the 10 million claims paid last year, 45 percent were for generic drugs.

Considering controls

But state officials have concluded that they must take more aggressive steps to control costs. Many of these steps would be required under a bill introduced by state Sen. Timothy F. Murphy, a Republican from the Pittsburgh area.

Under his bill, which is supported by the Pennsylvania chapter of AARP, the state would establish a list of preferred drugs, charge higher co-payments for drugs not on the list and encourage patients to use mail-order pharmacies to obtain three-month supplies of drugs for chronic conditions.

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