Despite Legal Challenges, Michigan’s New Medicaid Rx Drug Formulary Takes Effect

Michigan officials said a state program that would require pharmaceutical companies to offer discounts in order to have their drugs placed on a formulary for Medicaid and other public health insurance programs took effect Feb. 1, the AP/Detroit News reports (Durbin, AP/Detroit News, 2/1). Under the program, prescription drugs are organized into therapeutic categories, with several best-in-class drugs selected in each category by a small group of state-appointed pharmacists and doctors. Drug companies must reduce their prices to match the lowest best-in-class price in order to have their drugs included in the list of available drugs. Doctors can prescribe drugs not on the formulary but must call a phone bank of pharmacy technicians for approval. The program covers 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. On Jan. 7, Ingham County Circuit Court Judge Lawrence Glazer ruled that Michigan did not have the authority to require pharmaceutical companies to offer discounts on drug prices and issued a preliminary injunction against the program. However, on Jan. 17, the Michigan Court of Appeals agreed to hear the case and temporarily lifted the injunction on the program until it rules in the case (Kaiser Daily Health Policy Report, 1/18). Michigan will not enforce the program for the first few weeks of February "so it has time to make sure the new system is working," state Department of Community Health spokesperson Geralyn Lasher said. "We're not going to take any chances on something going wrong for a patient," she added. Michigan officials have said that the program will help control the state's drug costs for low-income patients, which have reached $1 billion per year, and will save the state at least $42 million this year.

Doctors Raise Concerns
Some state doctors have said that they have not received information from the state about the plan, including a list of the drugs on the formulary. They also have expressed concerns that the state "won't have enough technicians to ensure speedy approval of [non-formulary] medications." Lasher said that state doctors and patients should have received information about the program (AP/Detroit News, 2/1).