Michigan Appeals Court Temporarily Lifts Injunction on State’s Prescription Drug Formulary

A Michigan program that would require pharmaceutical companies to provide discounts to have their prescription drugs placed on the state's formulary for Medicaid and other public health insurance programs is expected to move forward after the Michigan Court of Appeals on Jan. 17 temporarily overturned a preliminary injunction issued by a lower court against the plan, the Wall Street Journal reports (Gold, Wall Street Journal, 1/18). Under the program, the state organized prescription drugs into therapeutic categories, and a small group of pharmacists and doctors appointed by the state selected several best-in-class drugs in each category to establish the formulary. The state asked drug companies to reduce their prices to match the lowest best-in-class price in order to have their drugs included in the formulary. Doctors could prescribe drugs not on the formulary but would have to call a phone bank of pharmacy technicians for approval. The program would cover about 1.6 million Medicaid beneficiaries and seniors in state-sponsored programs. Last November, the Pharmaceutical Research and Manufacturers of America filed suit in Michigan court alleging that the program violates the state constitution and state laws (Kaiser Daily Health Policy Report, 12/03/01). On Jan. 7, Ingham County Circuit Court Judge Lawrence Glazer ruled that Michigan "did not have the statutory authority" to require pharmaceutical companies to offer discounts on drug prices and issued a preliminary injunction against the program (Kaiser Daily Health Policy Report, 1/8). The Michigan appeals court agreed to hear the case and temporarily lifted the injunction on the program without comment until a final decision has been reached.

'Setback' for Big Pharma
The Wall Street Journal reports that the decision represents a "setback for the drug industry's efforts to prevent states from extracting price concessions on prescription drugs in state-funded health plans" (Wall Street Journal, 1/18). Drug companies argued that the Michigan program would limit access to certain drugs for patients, but according to the AP/Los Angeles Times, the appeals court "said it is not convinced that a delay is needed" to protect patients. PhRMA spokesperson Bruce Lott said, "We are disappointed that patients could be subjected to procedures that could be harmful to them, but we're confident we'll make the case in court" (AP/Los Angeles Times, 1/18). Advocates for the mentally ill who joined the case also disagreed with the appeals court decision (Wall Street Journal, 1/18). Mark Reinstein, vice president of the Mental Health Association in Michigan, said that "if the program continues, poor and disabled people will be denied access to needed drugs" (Webster, Detroit News, 1/18). However, James Haveman, director of the Michigan Department of Community Health, said, "We are extremely pleased to move forward with our efforts to offer high-quality care to low-income Michigan citizens while prudently managing costs." Michigan officials have said that the program would help control the state's drug costs for low-income patients, which have reached $1 billion per year, and would save the state at least $42 million this year (AP/Los Angeles Times, 1/18). The program will take effect Feb. 1 (Wall Street Journal, 1/18).