Florida to Negotiate Directly with Drug Companies on Medicaid Prices, Leads National Prescription Drug Round Up

A new law that allows Florida to negotiate its own discounts on prescription drugs for Medicaid beneficiaries will make the state the first in the nation to "break away" from the system of federally negotiated drug discounts, the Wall Street Journal reports. The law, which was signed by Gov. Jeb Bush (R) late last week, is expected to save the state $214 million per year, or about 15% of its Medicaid drug budget. Steven Findlay, research director for the National Institute for Health Care Management, said the law is "a pretty significant development" because "a large and important state is taking such a large and dramatic action ... and setting a precedent that maybe other states will follow." Prior to the Florida legislation, only California was exempted from the federal discount system because of pre-existing discount contracts with pharmaceutical companies, the Journal reports. But while the law allows Florida to negotiate its own pharmaceutical discounts, it also requires the state to create a limited formulary to which physicians must adhere. The formulary will be drafted by an appointed committee, which is to "consider both medical effectiveness and cost" when deciding which drugs to include on the list. After the formulary is created, physicians who wish to prescribe a drug not included on the list will "have to contact a Medicaid official and explain why." The Journal reports that this "added requirement is expected to prompt many physicians to prescribe drugs on the preferred list." Jerry Wells, pharmacy program manager for the Florida Medicaid program, said that he expects the initial focus to be on "popular and expensive" medicines, such as narcotic painkillers and ulcer medications. Marjorie Powell, assistant general counsel for the Pharmaceutical Research and Manufacturers of America, expressed "concern" that the Florida law "allows state officials to 'limit Medicaid patients' access to medicines based on cost, and not on the health benefits.'" With Florida the first state to "overcome pharmaceutical company opposition" to pass its own negotiation law, the Journal reports that other states with hefty Medicaid drug bills may "copy Florida's approach after more than a decade of relying on the federal government to cut drug-discount deals on their behalf" (Gold, Wall Street Journal, 6/4).

More State Action
Meanwhile, USA Today features a roundup of various state efforts to cut prescription drug costs more generally, a summary of which appears below.

• West Virginia: State legislators approved a plan to form a multistate purchasing pool open to state employees, retirees and their families that aims to "enact fair prescription pricing policies";
• Maryland: State legislators agreed to "ask the federal government for permission" to extend Medicaid drug discounts to Medicare beneficiaries;
• New Jersey: The state established a senior discount program allowing low-income individuals to pay only 50% of the "reasonable cost" of a drug;
• Maine: In addition to the launch of its Maine Rx program that allows the state to impose price controls on medications in three years if its negotiations with drug companies do not lead to price reductions, Maine has won federal approval to let residents with incomes of up to 300% of the federal poverty level receive discounts on pharmaceuticals (Appleby, USA Today, 6/4).