Md. applying to join drug-buying pool

Interstate cooperative got federal OK last week

April 25, 2004|By Cyril T. Zaneski | Cyril T. Zaneski,SUN STAFF

The Ehrlich administration is moving to join an interstate drug-buying cooperative in an effort to curb the soaring cost of medications for Medicaid recipients.

Officials at the Maryland Department of Health and Mental Hygiene have begun preparing applications to join Michigan, Vermont, New Hampshire, Nevada and Alaska in a venture that was launched by Michigan a year ago but which received the Bush administration's blessing just last week.

Under increasing pressure from states, businesses and senior citizens to control drug costs, the federal Centers for Medicare and Medicaid Services announced approval of the multi-state buying pool, which is expected to save the states already participating more than $12 million in drug purchases for 900,000 Medicaid recipients this year.

Maryland spent $437 million on drugs last year for the state's Medicaid program, which serves low-income residents. The program's drug bills have more than doubled, from $206 million, since 1999.

"The more lives are within the pool, the more manufacturers offer discounts," Joseph E. Davis, executive director of the Maryland health department's Office of Operations, Eligibility and Pharmacy, said Friday.

The buying pool is opposed by drug companies. A spokeswoman for the Pharmaceutical Research and Manufacturers of America decried the Bush administration's decision to approve the pool, saying it would "likely turn the vital Medicaid program for our poorest citizens into the equivalent of a government-run HMO, making decisions based on cost rather than patients' individual needs."

The pool requires participating states to adopt a list of preferred drugs that doctors should use when treating Medicaid patients. States then join forces to bargain as one for discounts on the medications.

More than 40 states, including Maryland, have already put preferred drug lists in place in an effort to control Medicare costs. Such programs require patients to get approval for drugs that are not on the list. And drug companies must provide discounts to have their drugs listed.

Maryland completed its list in February in an effort that officials expect will save about $16 million a year.

"We're already starting to see a market share shift because of the preferred drug list," Davis said.

Medicaid recipients have a $2 co-payment for many name-brand drugs and no co-payment for generics and for name brands on the preferred drug list.

Last week's White House approval was the key to Maryland's decision to join the interstate initiative, Davis said.

Davis had met in Nashville, Tenn., in February with Medicaid officials from 13 states to discuss the cooperative but delayed moving into the program because the Bush administration "was very much against" it.

"We had taken a hands-off approach, even though it was a very interesting concept," Davis said. "We wanted to take a cautious approach to moving into pooling."

With federal approval, the pool is expected to continue to grow. Hawaii has already applied, and Maryland is among six states expected to apply for membership, according to the National Conference of State Legislatures.

The Bush administration's approval comes two months after Michigan Gov. Jennifer N. Granholm, a Democrat, said the Medicaid agency told state officials it "was rejecting the program as a violation of federal procurement procedures." But two weeks after Granholm announced a pending federal rejection, Health and Human Services Secretary Tommy G. Thompson sent her a letter denying that a decision had been made.

Davis is not sure how much Maryland might save by moving into the Medicaid interstate pool.

"We do know that there is going to be an effect and that there will be savings," he said.

The Michigan Department of Community Health says it saved $8 million last year because of discounts from multistate bargaining, while Vermont expects to save $1 million this year, and Nevada expects to save $1.9 million.

Davis said the state's application into the Medicaid buying pool is part of a larger effort to cut drug costs, including efforts to pool drug purchases for state employees and AIDS patients.

"We're investigating everything," Davis said. "We're looking at the big picture."

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