Kaiser Daily Health Policy Report Rounds Up State Medicaid Prescription Drug Plans

As states try to balance their budgets, many are considering restrictions on Medicaid drug benefits. Below is a summary of recent actions taken by six states to create drug formularies, add drugs to preferred lists or adjust fees to pharmacists:

• Arkansas: The state would pay pharmacists a $2 per prescription incentive to dispense generic medicines in an effort to "deaden the pain" of cuts in Medicaid reimbursements to pharmacists, the Associated Press reports. The state Department of Human Services on March 1 increased from 10% to 14% of the average wholesale price the discount it receives from pharmacists dispensing medications to Medicaid beneficiaries, a move expected to save Arkansas about $2.3 million per year. The state's Medicaid drug costs totaled $200 million last year and have risen about 18% in each of the last two years. Richard Beck, executive director of the Arkansas Pharmacists Association, said that the $2 incentive for generic drugs would "take some of the edge off" the effects of the increased drug discount. According to state pharmacy director Suzette Bridges, switching to generic medications would save the state an additional $750,000 per year (Jefferson, Associated Press, 3/5).
• Louisiana: The state is hiring Ohio-based Provider Synergies to develop a formulary plan to cut costs in the state's $500 million-a-year Medicaid program, which have been rising 19% per year, the Baton Rogue Advocate reports. Provider Synergies is also implementing a preferred drug plan in Florida under which most pharmaceutical companies must sell medications at a 25% discount in order to be placed on the preferred drug list. Florida doctors must receive prior authorization to prescribe a drug not on the list to a Medicaid beneficiary. The Louisiana plan, which state Department of Health and Hospitals Secretary David Hood hopes will save the state at least $5 million per year, will use the Florida system as a model (Shuler, Baton Rogue Advocate, 3/7).
• Nebraska: The state is adding prescription drugs for "some common illnesses" -- including cold, fever, allergies, arthritis and ulcers -- to the list of medications for which physicians must receive approval before prescribing to Medicaid beneficiaries, the Omaha World-Herald reports. The move is expected to save the state up to $1.5 million per year by "reduc[ing] unnecessary or wasteful prescriptions." A committee of pharmacists and physicians will decide which additional drugs will be added to the list; the list expansion is expected to be "fairly dramatic," the World-Herald reports. Currently, doctors must obtain prior authorization only for "obscure products," including human growth hormones and drugs for sexual dysfunction (Olson, Omaha World-Herald, 3/6).
• North Carolina: The state has placed more than 30 prescription drugs considered "too expensive or easily abused" on a list and will require doctors treating Medicaid beneficiaries to get prior approval before prescribing them, the Charlotte Observer reports. North Carolina previously required prior authorization for only a few drugs. Under the revised lists, the number of restricted medications has increased 10 times and includes medications such as OxyContin, an addictive painkiller; Nicotrol, a tobacco deterrent; Vioxx, an arthritis medication; and several drugs used to treat hyperactivity and attention-deficit disorder (Stobbe, Charlotte Observer, 3/7).
• West Virginia: A proposed bill (HB 4666) would allow state Health and Human Resources Secretary Paul Nusbaum to develop preferred drug lists and negotiate privately with prescription drug makers for rebates and discounts under the state's Medicaid program, the Charleston Gazette reports. Prescription drug costs under Medicaid have doubled over the past five years, to $278 million in fiscal year 2002. Nusbaum said he "needs those [negotiation] tools" to control the program's costs. The bill "appears likely" to pass the full Legislature, particularly because it "breezed through" the Senate Finance Committee without being amended (Kabler, Charleston Gazette, 3/6).