Health & Human Services

Boarding the Rx Express

States are honing their approaches to lowering drug costs.
by | April 2005

Prescription drug spending is only 11 percent of national health care spending, but it is one of the fastest growing components--and one that has a major impact on states' coffers and residents' pocketbooks. To ease those pressures, states have been actively working on a number of fronts.

  • Drug importation:At least nine states have launched or are preparing to launch Web sites to help their residents buy prescription drugs from Canada and Europe, which U.S. regulators say is unsafe and illegal. The state sites have not been attracting many visitors as yet, but the Food and Drug Administration has begun blocking some shipments of foreign drugs to the state programs. Meanwhile, Springfield, Massachusetts, offers city employees in the city health plan the option to buy imported drugs. With 35 percent of eligible employees taking advantage of the offer, the city saved $3.5 million last year.
  • Multi-state bulk purchasing: Since 1985, Minnesota has administered the Minnesota Multi-State Contracting Alliance for Pharmacy, which purchases medications for 3,000 agencies across 42 states. With annual pharmaceutical sales in excess of $800 million, MMCAP has moved into national account status with all of the major and generic pharmaceutical manufacturers. The "Rx Issuing States" project, led by West Virginia and covering public employees in five states, is the only other multi-state bulk-purchasing group operating.
  • Intra-state joint purchasing: In 2000, Georgia consolidated its public health insurance programs under one agency to maximize the state's buying power. Since then, Texas and Massachusetts have enacted laws permitting them to put together intra-state pharmaceutical purchasing pools.

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