Prescription Drugs Introduction

States that Stand Out

SUCCESS STORIES

Arkansas
Arkansas has been at the forefront in using technology to profile physician prescription patterns and detail claims by diagnosis. The benefits include the capacity to identify physicians who could be prescribing drugs more cost effectively.

California
California pioneered two effective but initially controversial protocols for its Medicaid program: preferred drug lists that limit the medications available without prior authorization and supplemental rebates that require drug companies to cut prices even lower than the mandated Medicaid rebates in order to get on the preferred lists. These practices are now used by almost all states; in California, they produce $366 million a year in drug savings.

Delaware
The larger the purchase, the greater the leverage in obtaining discounts. Delaware has taken advantage of this shopper’s fact of life by combining its pool of Medicaid patients with its state employees to create a buying entity that accounts for one-third of the entire pharmaceutical market for the state.

Florida
The Sunshine State is attacking escalating drug prices with more programs, more quickly, than any other state. Over the past two years, Florida has reduced spending by $500 million through a preferred drug list, data management, use of counterfeit-proof prescription pads, restricting some beneficiaries to just one pharmacy and deals with manufacturers to finance value-added programs for the state.

Idaho, Missouri, Oregon, Washington
All three northwestern states have contracted with the Oregon Health and Sciences University to use “evidence-based analysis” to help guide decisions on pharmaceutical use. Missouri also has been a frontrunner in using this scientific approach, which takes a long-term view in analyzing the efficacy of drugs. The idea is to use solid research to make sure that short-term price advantages don’t eliminate drugs that may be more beneficial, and cost-effective, over time.

Michigan and Vermont
In 2003, the Medicaid programs in these states joined together in a purchasing pool. The pool utilizes a uniform preferred drug list in its negotiations with drug manufacturers. Although other states have discussed similar arrangements, these two are the first off the drawing board.

TROUBLE SPOTS

California
The internal controls necessary to ensure that drug rebates from manufacturers supplying medicines for the Medicaid program are accurately calculated and collected fall short in many states, but California has one of the biggest problems of them all. A recent audit suggests that there is currently more than $1 billion in uncollected rebates, but since the state can’t reconcile its records or support that figure, its chances of collecting are low.

Kentucky
Medicaid officials have done a lot to control drug costs, but ran into one roadblock last year that illustrates how difficult cutting costs can be. The Board of Pharmacy rejected a mandatory pill-splitting initiative, arguing that it compromised pharmaceutical professionalism. The drugs, which cost the same in varying strengths, were all already scored by manufacturers, and splitting them would have enabled the state to deliver twice the medicine at the same price. The state now has a voluntary program.

Massachusetts
Although Massachusetts was the first state to legislate a bulk purchasing program — aggregating the buying power of the state’s senior pharmacy assistance enrollees, Medicare and Medicaid recipients, state workers and under- and uninsured people — legislation hasn’t equaled progress. Thanks to resistance from executive branch leadership and executive agencies, implementation has been on hold thus far.

South Carolina
Managers would love to use data to better understand prescription patterns, but they’re saddled with computer systems that are decades old. Like other states with aging technology, they have plenty of data but can’t effectively use it.

Tennessee
In the past few years, growth in pharmaceutical expenses in TennCare has outstripped the high growth in most other states. The differences in managed care plans were an administrative headache for pharmacists, and doctors and the state couldn’t maximize rebates. In October, the state’s first preferred drug list went into effect, which should help.

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