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New governor readies formulary plan for battle.

Byline: DAVID STEVES The Register-Guard

SALEM - Last session's high-stakes fight over controlling prescription drug costs is returning to the Capitol.

Despite the 2001 Legislature's efforts to keep drug spending in check, pharmaceuticals remain the fastest-growing expense in the Oregon Health Plan. Drug costs in the plan soared from $62 million when the plan began in 1993-95 to a projected $300 million for 2001-03.

Gov. Ted Kulongoski is now trying his hand at cutting drug costs. His proposal would require doctors to use a formulary - a list of the most cost-effective drugs - when prescribing medicines for patients on the Oregon Health Plan. They would have to get approval from OHP officials before prescribing more costly alternatives.

Kulongoski's proposal would save an estimated $12 million for 2003-05, a figure that could grow over time as this formulary approach steers doctors and patients toward lower-cost drugs such as generics.

Kulongoski's plan builds on a bill passed last session, when then-Gov. John Kitzhaber got the Legislature to pass a bill that establishes a "preferred drug list" - something akin to a formulary except without that requirement that doctors stick to the drugs it contains.

Considering the fierce opposition mounted by the pharmaceutical lobby to defeat that bill, this year's version is likely to prompt another major lobbying effort.

Even one of the Legislature's chief proponents of Kulongoski's formulary plan thinks so.

"By the time this is said and done I'll probably have tire tracks all up and down my body. But I'm going there," said Rep. Ben Westlund, a Bend Republican who plans to support Kulongoski's proposal. He is chairman of one of four legislative committees expected to rework elements of the health plan.

The drug lobby is back in Salem in full force, and one of its top representatives is James Gardner, who lobbies for Pharmaceutical Research and Manufacturers of America. His association opposed last session's formulary plan, and Gardner questioned the wisdom of revamping it the way Kulongoski and Westlund want to this session.

"It seems premature and strange to abandon that program just when it's getting launched," Gardner said. He was most critical of the way a "prior authorization" element, used in Michigan and other states, would restrict physicians' freedom to prescribe the drugs they wish.

Formularies are cost controls built into most commercial managed care plans - including the roughly 300,000 Oregon Health Plan enrollees who received their care through such plans. The state's proposed formulary would affect the remaining 100,000 OHP patients who receive fee-for-service care.

One of the unique elements of the Oregon model adopted in 2001 is that experts are charged with producing a reference list that is available to the public, so other governmental and private health plans can use it to build formularies of their own. In doing so, they could refuse to pay for high-cost drugs that are often the subject of heavy-saturation marketing campaigns - a big reason drug companies don't like Oregon's approach.

This "preferred drug list" eventually will evaluate 25 classes of drugs. So far it has publicized information on four: anti-inflammatories, cholesterol reducers, long-acting narcotic painkillers and anti-ulcer drugs.

For three of the four drug classes, there was no evidence that the costlier brand-name drugs were more effective than generic alternatives.

The final version of the 2001 drug list legislation was watered down from earlier versions. It initially was proposed as a true formulary, from which doctors had to seek approval to prescribe drugs not on the list. Without approval, patients would have paid the difference between the listed drug and the more costly alternatives.

But the bill that passed allows doctors to ignore the list by simply writing "do not substitute" next to nonlisted drugs when they fill out a prescription.

The preferred drug list was projected to cut the Oregon Health Plan's drug costs by $7 million in 2001-03. But the actual savings are now expected to fall below that mark, according to Lynn Read, acting state Medicaid director. She said it wasn't clear what savings the drug list would actually produce.

The drug lobby may go on the offensive this session and push legislation that would reduce those savings further. Gardner said the state panel of experts and the administrators who oversee the formulary have misapplied the 2001 law by overemphasizing cost and not adequately taking effectiveness into account when determining which medications to place on the preferred drug list.

The drug lobby is considering legislation that would put some costlier drugs on the list for doctors to prescribe. Also, costlier drugs could be excluded from the list only if there is evidence that comparable medications are "clinically superior." It would no longer be enough to list the cheaper alternatives based on an absence of evidence that the costlier version works better.

Despite the pharmaceutical industry's political power, lawmakers should resist pressure to weaken the current formula or to fight the governor's plans to strengthen the law, said Terry Coplin, who oversees the Oregon Health Plan in Lane County.

"They've had influence for years and it's been all negative. They've driven up cost," said Coplin, administrator of Lane Individual Practice Association.

"They've had their chance. Now its time to let the professionals deal with this."

Reporter Tim Christie contributed to this report.
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Title Annotation:Oregon Health Plan: Industry lobbyists are sure to challenge a new proposal to cut drug costs.; Health
Publication:The Register-Guard (Eugene, OR)
Geographic Code:1U9OR
Date:Jan 26, 2003
Words:874
Previous Article:OHP by the numbers.
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