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Drug industry takes legal blows in Medicaid fight. (States Seeking Discounts on Medications).

The legal tide is still turning against the Pharmaceutical Research and Manufacturers of America in its fight against state policies regarding Medicaid-covered prescription drugs.

The industry group has been trying without success to stop state efforts to introduce prior authorization rules and obtain supplemental rebates for medications.

Now PhRMA has a new issue: Nine states and the District of Columbia have formed a nonprofit organization--the National Legislative Association on Prescription Drug Prices--that aims to manage their Medicaid prescription drug plans.

The latest legal setback came Dec. 17, 2002, when the Michigan Court of Appeals unanimously affirmed a lower court ruling upholding the state Department of Community Health's prior authorization program (PhRIVIA v. Michigan Department of Community Health). The ruling came 2 months after PhRMA was handed a defeat by a federal appeals court, which ruled that Florida's 2001 prior authorization program was legal (PhRMA v. Meadows).

The industry group is awaiting a ruling from a federal judge in Washington on a suit against the federal Department of Health and Human Services (PhRMA v. Thompson). PhRMA alleges that the department lacks authority to let states introduce preapproved drug lists for Medicaid.

Another PhRMA challenge to a drug rebate program in Maine has reached the Supreme Court (PhRMA v. Concannon). PhRMA among other things contends that using the market power of the state's Medicaid program to leverage discount drug prices is contrary to the purposes of Medicaid. The outcome is unclear: Several justices during oral arguments in January wondered why the Department of Health and Human Services hadn't acted on its own to reject or accept the program.

The state governments behind the National Legislative Association on Prescription Drug Prices--New York. Maine, Massachusetts, Connecticut, Rhode Island, Vermont, New Hampshire, Pennsylvania, Hawaii, and the District of Columbia--intend to pool their buying power to negotiate lower prices for a preferred drug list.

PhRMA spokesman Bruce Lott did not return phone calls seeking comment. Previously, he had said that prior authorization lists for Medicaid patients are wrong and illegal. "Our view is you can only require prior authorization of drugs for clinical reasons, not based on price. This violates federal law, and it harms patients," he said in a previous interview with this newspaper.

Typically, state prior approval rules are similar to those used in managed care, but they also often include a requirement for an additional rebate to the state beyond the normal 15.1% that drug companies usually kick in for Medicaid prescriptions.

Michigan's law went into effect in February 2002 despite the PhRMA lawsuit.

The Michigan Department of Community Health estimates that the state will meet the savings goal set by the legislature: cutting $42 million from the $1 billion annual cost of prescription drugs for Medicaid patients. The overall spending figure has doubled in the past 4 years.

Michigan's prior authorization list, for example, allows the selective serotonin re-uptake inhibitors generic fluoxetine, Paxil, and Paxil CR without prior authorization, while Celexa, Luvox, Prozac, Sarafem, and Zoloft require prior authorization. In another instance, second-generation cephalosporin antibiotics on the state's approved list include Cefaclor, Cefaclor ER, Ceftin, Cefril, Ceptaz, and Rocephin, while Cedor CD, Ceclor, Cefotan, and Lorabid must receive prior authorization.

Florida hopes to save more than $200 million through the program. Vermont estimates that prior authorization would cut its prescription drug costs by $10 million.
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Author:Perlstein, Steve
Publication:Internal Medicine News
Article Type:Brief Article
Geographic Code:1USA
Date:Feb 15, 2003
Previous Article:Drug ad suit settled. (Policy & Practice).
Next Article:Groups blame malpractice crisis on medical errors. (Consumer Advocacy Organizations).

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