Rising Drug Costs, State’s ‘Losing Streak’ Threaten Lottery Reserves That Fund Pennsylvania Senior Rx Program

The Pennsylvania Lottery is projected to run a nearly $200 million deficit by the end of fiscal year 2003-2004 budget cycle if the state cannot "hold down costs" for its senior prescription drug plan, the Philadelphia Inquirer reports. The lottery, which subsidizes prescription drug costs for low-income seniors through the Pharmaceutical Assistance Contract for the Elderly (PACE) as well as services such as in-home assistance for that population, should have $152 million on deposit at the end of the current fiscal cycle, according to 2001-2002 budget figures. However, the lottery fund could be running at a $188 million deficit by the end of the 2003-2004 cycle, in part due to bigger winnings, increasing drug costs and higher prescription usage. In FY 1999-2000, the lottery netted $1.7 billion and paid out $850 million in prizes while contributing $670 million to PACE and other senior programs. The lottery is required by law to contribute 30 cents of each dollar earned to programs and 40 cents to prizes. In the last fiscal year, the lottery had to spend 55 cents of every dollar on prizes because so many people won. "It's a game of chance and sometimes you lose," lottery spokesperson Sally Danyluk explained. According to state Sen. Timothy Murphy (R), however, much of the fund's decline has resulted from prescription drug costs, which have increased 10% annually on average. He added that senior prescription use has also increased by 12% annually. State Sen. Mike O'Pake (D), who served on a bipartisan task force investigating the issue this summer, said that PACE, which along with its partner PACENET serves about 227,600 people, only maintains half the number of participants it had 12 years ago. "We're paying twice as much to help half as many people. If you want to solve the problem, you have to take the pharmaceutical industry on," he added. Several legislators have proposed doing just that, with one Democratic plan calling on Pennsylvania to join a multistate coalition that would negotiate discounts with drug makers. And Richard Browdie, secretary of the Pennsylvania Department of Aging, is expected to release a plan for revamping the prescription program later this month. Although he would not discuss details, the plan is expected to include a "suggestion that seniors pay extra" when they select certain brand-name medications when a generic equivalent is available and could include a recommendation for raising the program's $6 co-payment. Pennsylvania is the only state that uses its lottery proceeds to fund programs for seniors (Wiggins, Philadelphia Inquirer, 11/10).