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PhRMA challenges prior approval for Medicaid Rx. (State Efforts to Mange Medicaid).

The legal tide has continued to turn against the Pharmaceutical Research and Manufacturers of America in its fight to stop state efforts to introduce prior authorization and require supplemental rebates for Medicaid-covered prescription drugs.

And now PhRMA has another issue to contend with: Nine states and the District of Columbia have formed a nonprofit organization that aims to manage their Medicaid prescription drug plans.

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 on manufacturers is contrary to the federal purposes of Medicaid. The outcome on this case 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.

In December 2002, the Michigan Court of Appeals unanimously affirmed a lower court ruling upholding the state Department of Community Health's prior authorization program (PhRMA v. Michigan Department of Community Health).

PhRMA was handed a defeat Sept. 6 when a federal appeals court ruled that Florida's 2001 prior authorization was legal (PhRMA v. Meadows).

The industry group is waiting for a ruling from a federal judge in Washington on a suit against the federal Department of Health and Human Services (PhRMA v. Thompson), in which the industry group alleges that the department does not have the authority to allow states to introduce preapproved drug lists for Medicaid.

The states joining together to launch the National Legislative Association on Prescription Drug Prices--a nonprofit group that plans to manage their own Medicaid prescription drug plans--are New York, Maine, Massachusetts, Connecticut, Rhode Island, Vermont, New Hampshire, Pennsylvania, and Hawaii, along with the District of Columbia. The state governments intend to use their combined buying power to negotiate lower prices for a preferred list.

PhRMA spokesman Bruce Lott did not return phone calls for comment. Previously, he had said that the process of prior authorization lists for Medicaid patients are both 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 conducted with this newspaper.

Typically, state prior approval regulations are similar to those in the managed care world, though 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 prior authorization list, for example, allows second-generation cephalosporin antibiotics Cefaclor, Cefaclor ER, Ceftin, Cefzil, Ceptaz, and Rocephin without prior authorization, while Ceclor CD, Ceclor, Cefotan, and Lorabid must receive authorization.

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 of $42 million off the $1 billion it currently spends each year on prescription drugs for Medicaid patients--a figure that has doubled in the past 4 years. Florida reckons to save more than $200 million.

Vermont, for example, estimates that prior authorization would chop $10 million off its prescription drug costs.
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Title Annotation:Pharmaceutical Research and Manufacturers of America
Author:Perlstein, Steve
Publication:Pediatric News
Geographic Code:1USA
Date:Feb 1, 2003
Words:537
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