States in Forefront of Fight for Cheaper Drugs

West Virginia is breaking new ground in bargaining for lower drug prices for Medicaid patients, state workers and residents, an effort expected to intensify in state legislatures in 2005.

In a special session, West Virginia lawmakers voted Nov. 17 to become the first state to attempt to bargain for the same drug prices granted some federal government agencies. The legislation authorizes a new Cabinet-level pharmaceutical director to negotiate for price discounts with drug makers for both the state government and private-sector buyers.

The measure also allows the state Pharmaceutical Cost Management Council to create a uniform preferred drug list that puts all state agencies and private-sector individuals in one buying pool.

“The West Virginia measure enacted (Nov. 17) is indication that some states continue to look beyond the federal Medicare law to achieve lower costs for pharmaceuticals,” said Richard Cauchi, a health policy analyst at the Denver-based National Conference of State Legislatures.

Maine is the only other state to pass legislation, in 2000 and 2003, requiring price controls for general pharmaceutical sales.

Fighting for lower drug prices long has been a province of state lawmakers, but with medical costs eating up an ever-larger portion of state budgets, controlling health care costs is becoming a top priority in state governments.

A growing number of state lawmakers and governors are turning to Canada and Europe to find medicine at prices that are 30 percent to 60 percent lower than in the United States.

The White House and the U.S. Food and Drug Administration maintain that imported medicines are unregulated and unsafe and prohibit importation. But proponents contend the safety concerns are groundless. They say drug companies’ prices are unfair and cause U.S. consumers to shoulder too great a share of the cost of innovative drug research.

One thing all sides of the debate agree on is that it’s unlikely the Bush administration will change course and permit importation anytime soon.

As directed by the Medicare Modernization Act, which Congress approved in 2003, a federal task force headed by U.S. Surgeon General Richard Carmona is expected to announce by Dec. 8 whether importation can be done safely. Proponents are not holding their breath.

“With Medicaid and prescription drug costs continuing to skyrocket, state legislators are under a great deal of pressure to continue to find ways to provide affordable prescription drugs to those who need them most, without busting their state budgets,” said Sharon Treat, a former state senator from Maine who heads the National Legislative Association on Prescription Drug Prices, which advocates for better drug prices.

“While no one looks to Canada as the long term solution, as long as the U.S. government fails to act, states will continue to encourage their citizens to shop around for the best deal, which at the moment lies across the border,” Treat said.

Indeed, a number of states have gone beyond the initial step of setting up Web sites to help residents independently purchase drugs from state-inspected Canadian pharmacies, as Minnesota, New Hampshire, North Dakota, Rhode Island and Wisconsin did earlier this year.

In Maine, a state long regarded as a trailblazer in health policy, Democratic Gov. John Baldacci wants to re-import prescription drugs in bulk and partner with the Penobscot Indian Nation to create a central repository that will distribute medicines to local retail pharmacies. Baldacci, who views the move as an economic development project and a pharmaceutical cost-saver, is waiting on federal approval of his plan.

Baldacci plans to convene a working group in January that will include legislators and retailers to vet the details, according to Jude Walsh, special assistant to the governor.

In Oregon, Gov. Ted Kulongoski (D) is awaiting federal approval of a pilot importation project he proposed in mid-August, and Vermont is waiting on the outcome of a lawsuit it filed against the federal government for rejecting the state’s importation proposal.

Illinois, Missouri and Wisconsin also have teamed up to secure access to Canadian drugs for their residents. Democratic Govs. Rod Blagojevich of Illinois and Jim Doyle of Wisconsin and lame-duck Gov. Bob Holden of Missouri joined forces in late October to form the I-SaveRx program. The plan uses a Canada-based clearinghouse to link residents to pharmacies and drug wholesalers from Canada and Europe approved by Illinois health inspectors so that they can get better deals on 100 brand-name medicines.

Missouri Gov.-elect Matt Blunt (R) has pledged to monitor and maintain the I-SaveRx program under his new administration, according to spokesman Spence Jackson. Gov.-elect John Lynch (D) in New Hampshire, where outgoing Gov. Craig Benson (R) set up an importation Web site in 2004, also said he will continue the effort. And Montana Gov.-elect Brian Schweitzer (D) has long advocated legal importation.

Thus far, 27,775 I-SaveRx enrollment forms have been requested from all three states, and 725 prescriptions have been filled, according to Blagojevich’s press secretary, Abby Ottenhoff, who said state-by-state data were not available. “The thought that more than 700 individuals are already saving money on their prescription drugs is very encouraging,” Ottenhoff said.

Opponents of importation contend state efforts have attracted modest participation and say that’s indicative of safety and other concerns.

“It’s been a popular experiment with four or five governors, but the reality is that there is a declining number of people looking to those programs for assistance,” said Wanda Moebius, a spokeswoman for the Pharmaceutical Research and Manufacturers of America, citing a Nov. 7 report by the Milwaukee Journal Sentinel that found Web sites have experienced declining participation. PhRMA, which represents the pharmaceutical industry, has lobbied heavily against re-importation.

The Wisconsin governor’s office said 2,299 prescriptions had been filled by three Canadian pharmacies. However, in the first month of operation, the Canadian pharmacies filled 765 prescriptions, whereas they filled 364 in August, the last month for which data were available. The Minnesota governor’s office reported that 4,960 prescriptions had been filled by the end of September. North Dakota reported 560 hits on the state’s importation Web site in October, but did not have recent data on the number of prescriptions filled.

Despite the momentum, supporters of drug imports have suffered setbacks.

Several U.S. drug manufacturers are limiting the supply of prescription medicines they’re selling to Canadian wholesalers. And in a recent address, the Canadian health minister said Canada “cannot be the drug store for the United States of America.”

“Canada is not a real cooperative partner in this venture, and I think that’s very important to keep in mind,” said Jim Frogue, a health policy expert at the American Legislative Exchange Council, a legislative member organization that opposes drug importation.

During 2004, at least 14 legislatures rejected or tabled importation legislation, and some state boards of pharmacy, including those in California, Minnesota and Oregon, are working against drug imports. California Gov. Arnold Schwarzenegger (R) vetoed several bills this summer that would have allowed importation because they violated federal law and did not include adequate safety provisions.

Schwarzenegger and leaders in many other states, regardless of their position on imports, have advocated other avenues to curtail soaring drug costs. Theses tactics include establishing prescription-drug discount or subsidy programs for low-income residents (22 states), buying medicine through bulk-purchasing pools (12 states) and regulating pharmacy benefit managers (five states). In addition, Ohio and a number of other states have filed lawsuits against drug makers alleging that they’ve overcharged or defrauded Medicaid programs.

Bernie Horne, policy director at the progressive Center for Policy Alternatives, said importation is not the solution to reining in drug costs, but the interest it has generated illustrates systemic problems with health-care quality, access and affordability.

“We don’t want Canadian drugs,” Horne said. “We want Canadian prices.”