Healthy Skepticism Library item: 1565
Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.
Publication type: news
Gold R.
Federal Judge Lets Stand Florida Law Seeking Rebates From Drug Makers
The Wall Street Journal 2002 Jan 3
http://online.wsj.com/article/SB1010008142877430440.html?mod=googlewsj
Full text:
A federal judge in Tallahassee let stand a Florida law that seeks rebates from drug makers in exchange for inclusion on a list of preferred Medicaid drugs.
The ruling, a major setback for the pharmaceutical industry, is likely to prompt other states to follow the lead of Florida, which passed the law in an effort to restrain its sharply rising drug spending. Already, Michigan has implemented a program partly modeled on Florida’s.
“As the legal hurdles melt away, I think more and more states will pay attention” to Florida, said Greg Vadner, the Missouri Medicaid director and vice chairman of the National Association of State Medicaid Directors. “The precedent appears to be leaning our way,” he said, referring to Friday’s ruling.
The Pharmaceutical Research and Manufacturers of America, a Washington-based trade group known as PhRMA, had brought the suit to block the Florida initiative. PhRMA, which represents the nation’s brand-name prescription drug manufacturers, is planning to appeal the case to the Eleventh U.S. Circuit Court of Appeals in Atlanta.
At stake is a portion of the $25 billion states spend on prescription drugs each year through Medicaid, a joint federal-state program to provide health care to the poor and disabled.
Faced with tight budgets and double-digit inflation in pharmaceutical costs, states have been looking for ways to control expenditures. In turn, this has prompted PhRMA to use statehouse lobbying and an aggressive legal strategy to quell such efforts.
In May, Florida lawmakers approved an innovative effort to slow Medicaid spending increases by creating a list of preferred drugs. To get on the list, manufacturers had to offer the state a 10% supplemental rebate on top of a federal rebate, which averages 15.1%. If a drug isn’t on the list, doctors must get verbal authorization from a phone bank of pharmacists and pharmacy technicians before the prescription can be filled.
This added inconvenience discourages doctors from prescribing drugs not on the list and shifts patients toward the preferred drugs. For example, after the preferred list went into effect, the market share for Imitrex, GlaxoSmithKline PLC’s popular antimigraine drug that isn’t on the list, dropped to 6% from 60%. The share of Merck & Co.‘s Maxalt, an antimigraine drug that is on the list, rose to 89% from 16%, according to a consultant hired by PhRMA. As a result of the supplemental rebates, the state expects to save at least $100 million this fiscal year.
Pfizer Inc. and Bristol-Myers Squibb Co., both based in New York, cut deals with Florida to get all of their drugs on the list without discounts. Instead, they created programs to improve the health of chronically ill patients and guaranteed cost savings to the state. Despite this favored status, the companies, both of which are members of PhRMA, say they support the goals of the lawsuit.
PhRMA filed the suit in August in U.S. District Court in northern Florida, claiming the state’s law broke a federal rule that all prescription drugs be available to Medicaid recipients unless the drug offers no clinically meaningful benefit. The court disagreed, finding that Florida’s list steered doctors and patients toward certain preferred drugs, but didn’t prevent access to nonpreferred drugs, which would be illegal under federal law.
Jan Faiks, PhRMA’s assistant general counsel, said in a statement that she disagreed with the judge’s ruling and worried that the Florida law would strip Medicaid recipients of access to needed drugs and “could seriously harm the health of these patients.”
Mark Striker, a pharmaceutical analyst at Salomon Smith Barney in New York, says the case was an important part of the “pharmaceutical industry’s attempt to slow state momentum” to obtain price discounts. In another closely watched case, PhRMA is suing to block a similar preferred drug list in Michigan. Details of the Michigan program were finalized last month. That case is filed in state district court in Lansing, Mich. A hearing is set for later this month.
Write to Russell Gold at russell.gold@wsj.com
