Facing Escalating Costs, Louisiana Looks to Reform ‘Generous’ Medicaid Drug Benefit

Louisiana's "generous" prescription drug benefit for Medicaid beneficiaries has created millions of dollars in increased costs, prompting state officials and lawmakers to propose several measures to scale back the benefit, the New Orleans Times-Picayune reports. Under the program, Medicaid beneficiaries pay only $3 or less for each brand-name medication. Louisiana is the only state with a law that "specifically bans requiring [Medicaid] patients to get prior authorization for medications," the Times-Picayune reports. The state's Medicaid drug costs have increased from $245 million in the 1995-96 fiscal year to roughly $447 million this year, and state Department of Health and Hospitals Secretary David Hood projects that costs will exceed $1.1 billion by 2005-06 if no changes are made to the drug benefit. Hood, who "holds drug companies responsible" for the increase in Medicaid drug costs, has proposed "limiting the number of ... name-brand medications available to Medicaid patients," subjecting them to "review by pharmacy experts who are able to monitor costs and patients' well-being," thereby encouraging doctors to prescribe less expensive generic medications. Addressing the concerns of drug companies and some doctors who say such a plan would make the state's poor population "even less healthy" and could interfere in the doctor-patient relationship, Hood said that a "competent board" of "medical professionals" would "determine whether certain drugs may be the only effective treatment." He said the plan would save the state as much as $35 million in its first year.

A 'More Palatable' Option?
In addition, state Sen. Tom Schedler (R) has proposed two bills that would restrict the Medicaid drug benefit. The first measure (SB 507) is modeled after a recently enacted Florida law that limits all Medicaid beneficiaries, except those in nursing homes or under 21 years old, to four brand-name prescriptions per month but allows them an unlimited number of generics. Doctors can prescribe a fifth brand-name drug, but first must obtain state approval. This plan would save the state an estimated $19 million in its first year, the Times-Picayune reports. Schedler's second bill (SB 502) would "limit Medicaid patients to a list of less expensive prescription drugs unless their doctors seek prior authorization from the state" (Ritea, New Orleans Times-Picayune, 4/29).