Six States to Discuss Prescription Drug Purchasing Pool for Employees/Retirees

Looking for a way to curb "rapidly-escalating prescription drug costs," six states will hold a meeting in Atlanta on March 23 to discuss forming a multi-state drug purchasing pool, the Wall Street Journal reports. Officials from West Virginia, Georgia, North Carolina, South Carolina, New Mexico and Washington say they hope that by combining more than a million state employees, retirees and their families under one pharmaceutical-benefits manager, the states will have more "leverage" to negotiate discounts from drug companies. The "Southern Coalition" is meeting just a few months after Maine, Vermont and New Hampshire started a pool to purchase prescription drugs for Medicaid beneficiaries, with the hope of expanding the program to state employees. The Southern Coalition's pool would work in the opposite direction, starting with state employees and later expanding to Medicaid beneficiaries.

A Sign of 'Crisis'
The rise of purchasing pools is a "signal of how serious" an issue drug costs have become, the Journal reports. Increasing drug spending is forcing states to pass the cost on to state employees through premium increases, and many states are facing Medicaid budget shortfalls. In West Virginia, prescription drug costs are expected to increase 28% in fiscal year 2001 and another 18% in fiscal year 2002. Amanda McCloskey, health policy director for Families USA, said, "On what other issue have we seen states pool together? ... It tells you just how desperate they feel and how much of a crisis this issue is."

A Wise Idea?
The Southern Coalition purchasing group is the idea of West Virginia Gov. Bob Wise (D), who in his State of the State address promised to combine the purchasing power of state agencies for more leverage with pharmaceutical companies. However, West Virginia's 200,000 state employees did not provide enough bargaining clout, so Wise decided to take his idea to other states. In addition to the six states meeting today, Kentucky, Alabama and Maryland have expressed interest in the pool. If the meeting is successful, states will try to direct their members toward certain drugs and use that leverage to gain negotiating clout with drug companies. The Journal reports that one obstacle for the coalition will be agreeing on the list of preferred drugs. William Ashmore, executive director of the Alabama State Employees' Insurance Board, said, "You will have to overcome the politics of it all. Each of us has a Legislature. Lobbying plays a big part in the decisions we have to make." For their part, pharmaceutical companies say that purchasing pools are not a cure for "what ails the states." Jeff Trewhitt, spokesperson for the Pharmaceutical Research and Manufacturers of America, said that "newer, more expensive drugs' being prescribed more often by physicians has caused the rise in drug expenditure, not cost inflation (Gold, Wall Street Journal, 3/23).