News Briefs: Drug industry fights state price controls
October 1, 2002 2 minutes read
The Pharmaceutical Research and Manufacturers of America (PhRMA) in Washington, DC, is continuing its fight to stop state Medicaid programs that ask for rebates from prescription drug companies. In late August, the group announced that several patient organizations, such as a Michigan chapter of the National Alliance for the Mentally Ill, had joined its lawsuit, filed in U.S. District Court for the District of Columbia.
PhRMA and the patient advocacy organizations have asked the federal court to issue a preliminary injunction invalidating a program approved by the Secretary of Health and Human Services and implemented by the state of Michigan. The program restricts Medicaid beneficiaries’ access to prescription drugs unless the manufacturer pays the state additional rebates beyond those required by the Medicaid program. The lawsuit also asks the court to prohibit the Secretary from approving other states’ programs sharing some or all of the characteristics of the Michigan program.
The months-old Michigan program is already considered a success by organizers. Drug companies that refused to cut prices found that their market share fell as a result of the program. For example, the market share for Merck’s simvastatin (Zocor) fell from 15.6% to 1.4% in Michigan, according to The Wall Street Journal. Merck and AstraZeneca PLC have since cut prices to be included on the program’s preferred drug lists.
PhRMA still faces a big challenge to its lawsuit in the Stabenow Rx Flexibility for States Act (S. 2536), which passed the Senate by a vote of 56-43 in July. The Stabenow Medicaid Amendment ensures states have the legal right to extend Medicaid rebates and discounts for prescription drugs to non-Medicaid-eligible residents who do not have prescription drug coverage.
PhRMA argues that the Stabenow measure would put state bureaucrats, not doctors, in charge of medical decisions for Medicaid patients. In addition, lobbying groups for the mentally ill and AIDS patients want all drugs used by their patients reimbursed under Medicaid, because not all of the patients respond to the same drugs. Some health care professionals also argue that price controls artificially inflate demand of prescription drugs by shielding patients from their true market price.
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