Washington Post Examines Drug Companies’ Legal Action Against States Attempting To Lower Drug Costs

The Washington Post on Aug. 26 reports on the "latest and perhaps most aggressive attempt" by states to reduce "exploding" prescription drug costs in their Medicaid programs -- prescription drug formularies and prior authorization rules. But those efforts that have led to a "legal brawl" with the pharmaceutical industry, the Post reports. Many states have begun to use the practices in their Medicaid programs to "direct doctors and patients toward more cost-effective treatments" for a number of conditions. States that use the practices charge Medicaid beneficiaries "little or nothing" for generic or lower-priced brand-name prescription drugs that appear on the formularies and require doctors to obtain authorization before they can prescribe medications that do not appear on the preferred drug lists. Although private health insurers have used prescription drug formularies and prior authorization rules for years, use of the practices by the government marks a "new -- and controversial -- approach" that could have "broad repercussions," the Post reports. According to the Post, the practices could save governments hundreds of millions of dollars but would place Medicaid beneficiaries in a "drug benefit maze" and lead to "radical shifts" in the use of some prescription drugs. The Pharmaceutical Research and Manufacturers of America has filed several lawsuits to block prescription drug formularies and prior authorization rules in a number of states. PhRMA argues that prescription drugs that "appear the same affect patients differently" and that the practices "illegally restrict care for the poor by creating barriers to the most expensive drugs." The Medicaid program generated about $20 billion in revenue for pharmaceutical companies last year and paid more per prescription than most large private health insurers and other government agencies, such as the Department of Veterans Affairs, the Post reports. Medicaid accounts for an average 20% of state budgets, and prescription drug expenditures have risen "far more rapidly than any other health cost," the Post reports (Connolly, Washington Post, 8/26).