Stateline Story

States Scrambling To Help Elderly With RX Costs

The race is on to help the elderly with prescription drug costs. President Clinton, Congress and most state legislatures are competing for the political credit.

"A larger-than-ever number of states are interested in looking into this. This topic in past years has not risen to the top five priorities like it has now," says Richard Cauchi, senior policy specialist with the National Conference of State Legislature's Health Care Program in Denver.

So far, 29 states have senior pharmaceutical assistance programs on the agenda for 2000, Cauchi told Stateline.org.

Sixteen states currently have programs to assist low-income elderly in paying for prescription drugs. Four of them are relative newcomers: North Carolina and Nevada adopted their subsidy programs and Delaware and Maine added subsidies to existing programs just last year.

Since the first tobacco settlement disbursements went out in December 1999, many states now have the financial means to provide drug assistance to seniors. But they are not alone in addressing the problem. Clinton and U.S. Sens. John Breaux (D-LA) and William Frist (R-TN), the Senate's only physician, have solutions as well.

Jeff Trewhitt, spokesman for Pharmaceutical Research and Manufacturers of America (PHRMA), said his trade group supports the Breaux-Frist bill and wants a solution to the problem at the national level rather than on a state-by-state basis.

"Doing business is difficult enough. If you've got 50 different laws, you've got a potential nightmare," Trewhitt said.

State legislatures disagree, however, and are active in creating solutions on their own instead of waiting for Congress to act. Drug assistance plans on this year's state legislative agendas generally fall under three categories: subsidies, bulk-purchasing arrangements and direct price controls.

Subsidy programs are funded by the state. Bulk-purchasing arrangements generally involve negotiating discounts from drug manufacturers. Price controls are discounts from pharmaceutical companies mandated by law, either through a price control review board or through a rebate rate set by the state.

California set the tone for other states last year by enacting a law that went into effect on Feb 1. It requires pharmacies to provide Medicare recipients with the same discounts mandated for Medicaid recipients. Cauchi said many state legislators are looking at California's bill as a model because it doesn't involve a state subsidy and can be implemented with little cost.

A bill was filed in the Florida House last month requiring the same extension of Medicaid drug discounts to Medicare recipients, and Washington and Wisconsin have proposed legislation along the same lines. The Florida bill also uses the bulk-purchasing approach by combining its Medicaid program, prisons and state employee insurance fund into a buying conglomerate that could demand discounts from pharmaceutical manufacturers.

Massachusetts approved a bulk-purchasing program in 1999, but it has yet to become operational. In his recent state of the state address, Oregon Gov. John Kitzhaber, a licensed physician, proposed a bulk-purchasing program as well. His plan will have to wait for the Oregon legislature to convene in 2001, Cauchi said.

Maine, Massachusetts, Vermont and New Hampshire met in December to consider a bulk-buying coalition. These states will meet again Friday, joined by Connecticut, New York and Rhode Island, to discuss this option further. The seven states will also discuss the possibility of employing price controls.

Maine's Democratic Senate Majority Leader Chellie Pingree last week began discussion on a bill that would assist elderly citizens in paying for prescriptions by imposing controls on what drug manufacturers can charge. Pingree's plan would involve a board to regulate drug prices just as a utilities commission regulates electricity rates. Vermont's Senate is also considering creating a review board to regulate prescription drugs.

More subsidy plans are in the works as well. The Kentucky House last week considered a bill to create one. In the Virginia Assembly, Democrats have also proposed subsidizing drugs for the elderly.

Amid the flurry of plans remains the question: Are 50 state plans better than one federal solution? According to the elder lobby AARP, it's not an either-or situation. It says both levels of government must work together to ensure adequate coverage for seniors.

"There's the idea that the programs in the states diminish the need for federal Medicare benefits," said Cheryl Matheis, director of state legislation for the AARP. "Programs in the states aren't going to be able to do the kinds of things that Medicare can do."