Your Medicaid Program Can Save Money Without Hurting Patient Health

Tip of the Month: You Can Cut Medicaid Costs Without Harming Patients - Follow Alabama & Oregon's Lead

Consider using an Average Acquisition Cost (AAC) model for drug
pricing, which uses actual pharmacy invoices in determining average acquisition
costs to pharmacies. This approach enables states to get a better handle on the
"spread" and is more reflective of acquisition and dispensing costs
and also ingredient costs for certain specialty drugs.

Most states still use Average Wholesale Price (AWP) which has been
subject to much gaming by the industry, resulting in many fraud case brought by
state Attorneys General and earning the moniker "Ain't What's Paid."

The Centers for Medicare and Medicaid Services (CMS) is developing
a database of National Average Drug Acquisition Costs and is encouraging states
to adopt an AAC payment methodology based on this resource. CMS plans to
distribute its database at the end of 2011 based on a CMS survey of retail
pharmacies.

Alabama, the first state to
receive CMS approval for using AAC, has projected savings of $30.5 million in
the first year, or 6.1 percent of its current fee-for-service drug expenditures
of $500 million. The new method was announced September 22, 2010 and went into
effect March 23, 2011. Oregon expects
to save $1.6 million, or 1 percent of its $160 million fee-for-service Medicaid
drug expenditures. Idaho,
which is in the process of implementing AAC, expects to save $2 million in
state general funds and $4.6 million in federal funds, for a total of $6.6
million.

Medicaid Pharmacy
Reimbursement Reform:
Trends and
Recommendations

Presentation
Appendices:
Attachment 1 Pembroke
Pharmacy Market Share 2010 E
Attachment 2 updated
State reimbursement
Attachment 3a Kaiser
Medicaid P91
Attachment 3b Kaiser
Medicaid P92
Attachment 4 Takeda
2009

Speakers Mike
Winkelman, Pharmacy Consultant
Nell Geiser,
Change to Win Pharmacy Initiative Coordinator
Mr. Winkelman and Ms. Geiser discuss opportunities for states to
achieve a more transparent and accountable Medicaid pharmacy reimbursement
system that can result in significant savings. As states struggle to cut costs
while maintaining quality healthcare for vulnerable residents, now is the time
for lawmakers and agency officials to advance common-sense reimbursement
reforms.

Despite positive policy changes related to Federal Upper Limits
and Average Whole Price, many states are still losing out and paying
significantly more than other payors for pharmacy services. The result is that
providers sometimes retain unjustifiable profits, and there is no accurate way
to track that spread. In response, some states have successfully implemented
highly effective MAC lists, and others are testing new ground using Actual
Acquisition Cost, but state officials are still grappling with the question of
how best to ensure Medicaid is paying a fair and transparent price for
prescriptions. The presentation includes recommended guidelines for
reimbursement policy reform and estimates of projected savings if new
benchmarks are implemented.

Want to learn more?
Issue brief from Community Catalyst
Policy paper from Kaiser Family Foundation
Information from Alabama's Medicaid Program
Prescription Policy Choices website
NLARx website

Will the Drug Industry Get its Heart's Desire and Soon be Able to Market Off-Label and Every Other Way?

The pharmaceutical industry is getting ready to bootstrap from the Supreme Court's IMS v. Sorrell decision overturning New Hampshire's privacy rules on datamining to get rid of the pesky FDA rules limiting their marketing activities to approved uses of drugs. As the Wall St. Journal reported recently, industry attorneys are gearing up to challenge longstanding FDA regulations that have been the source of dozens of legal settlements and even criminal convictions for deceptive marketing, most recently when Glaxo Smith Kline agreed to pay $3 Billion to the US government earlier this week to settle civil and criminal charges in the marketing of Avandia. Read the Pharmalot post and this article on Par Pharma.

This should be no surprise to anyone participating in the symposium on the Sorrell decision held last month at New Hampshire Law School, co-hosted by the Vermont Law School, where legal scholars and practitioners both supporting and disparaging of the US Supreme Court's decision agreed on its breadth and the potential that further litigation could expand the scope of the First Amendment to limit FDA marketing rules. Law professor Kevin Outterson addresses this issue in his post "The Last Drug Company Settlement for Off-Label Promotion" in his blog The Incidental Economist.

By the way, the industry is not going be content with letting this issue percolate through the courts. Leaked US negotiating textfrom recent TPPA trade negotiations (see more on this below) would require countries to allow drug companies to post "true information" on their websites and link to any other website in existence - including social media where so many problems have already cropped up.

For more information:

Sharon Anglin Treat, NLARx Executive Director

207-622-5597

streat@reducedrugprices.org

See this Story in NLARx's Advertizing & Marketing News

Is anyone listening? Will the Feds Finally Do Something about Antitrust Problems in the PBM Industry?

There's plenty of attention being paid -finally!- to the super-concentration of the pharmacy benefit manager (PBM) marketplace, and the latest merger. The federal Trade Commission (FTC) is in the middle of an investigation of the proposed Express Scripts-Medco merger, which would create the nation's largest administrator of drug benefits if federal regulators sign off. The FTC investigation could last several more months (details are confidential). There are 33 state AG offices led by Pennsylvania that are looking into the merger, and there will be a Senate Judiciary hearing in early December. A House committee held a similar hearing last month and 14 members of Congressrecently signed a letter of concern to the Federal Trade Commission. The powerful industry isn't taking this lying down, and is out lobbying in force on Capitol Hill. Read this article about "dueling lobby days." Consumer groups as well as community pharmacists have led the fight against the merger, with a recent press conference and the formation of a national coalition, not to mention op-ed articles. No wonder Medco is championing robots over pharmacists! NLARx signed a letter with other national consumer groups opposing the merger earlier this year. Want to stay up to date on merger action and reaction? Go to a new website, http://r20.rs6.net/tn.jsp?llr=dxiucccab&et=1108455173285&s=0&e=001dnQC3_70n_JIq3I7-chWAcw7yLzl7QnI77l1TF4MqRSuJGjiikHDWmvfdjXbCYLNFu5lrnI-0VaVSpfYCACd0beHuTVu9Bii.

For more information:

Sharon Anglin Treat, NLARx Executive Director

207-622-5597

streat@reducedrugprices.org

See on Pharmacy Benefit Managers news page

Trans-Pacific Partnership Talks in Lima, Peru Focus Attention on Access to Medicines Issues Disclosed in Leaked Text on Pricing and Patent Policies

NLARx Executive Director Sharon Treat attended the TPPA stakeholder events in Lima, Peru last month and presented on medicines issues at the official forum October 25. The talks include nine Pacific Rim nations, including the US, but could expand to include as many at 22 nations before the ink is dry on a final deal, with Canada, Japan and the Philipines poised to get involved soon, according to US negotiators. Here is a nice roundup on the Peru talksposted by Knowledge Ecology International. While the trade talks haven't received much media attention here in the US, they are a big deal in Peru where health advocates worry that the trade deal will make drugs unaffordable, and in New Zealand, where the national Pharmac program, under which New Zealanders can purchase most drugs for a few dollars a script, is exceedingly popular (see this "Pharmac attack" web posting.) Leaked negotiating text was posted on the Internet during the Lima talks, including texts on healthcare transparency and pricing and intellectual property. The leaked provisions are somewhat similar to the Korea and Australia agreements and raised many concerns among access to medicines groups, state legislators, and even law professors. More For complete leaked text, relevant documents and analysis, we recommend the InfoJustice website as well as Public Citizen's Access to Medicines Campaign. Read Sharon Treat's statement on the leaked text here. NLARx, state legislators and other state officials have raised concerns about both procedural and substantive provisions in the Australia and the Korea FTAs, which include pharmaceutical provisions that could conflict with the effective implementation of Medicaid and reduce access to affordable medicines under 340B and other programs. Although the Australia FTA's pharmaceutical provisions [Annex 2-C] and now the Korea agreement are a done deal, the Trans-Pacific Partnership Agreement is still being negotiated, and thus is still open to change. While state legislators were able to convince the USTR to include a footnote in in the Korea FTA "carving out" Medicaid from its provisions, we continue to have concerns because this carve-out does not include other important programs such as 340B, and because the FTAs would essentially lock the US into the current way of pricing drugs in Medicare Part D and call into question reforms in the Affordable Care Act. From the leaked text, it is impossible to know whether the USTR intends to carve out Medicaid, expand the carve-out to other programs, or delete the carve-out altogether, and the USTR's chief negotiator did not answer a question about the carve-out at the stakeholder briefing in Lima. For more information:Sharon Anglin Treat, NLARx Executive Director207-622-5597streat@reducedrugprices.org

Why is U.S. Trade Policy Reducing Access to Pharmaceuticals?

Pharmaceutical pricing and intellectual property issues have been front-and-center in the debate over the Korea-US free trade agreement under consideration by Congress, as well as in the Trans-Pacific Partnership Agreement (TPPA) still under negotiation. In past years, NLARx and member legislators raised concerns about both the Australia and the Korea trade agreements, which included pharmaceutical provisions that could have conflicted with the effective implementation of Medicaid and reduced access to affordable medicines. In January 2011, NLARx adopted aResolution opposing these provisions in the TPPA.

On September 10 in Chicago, NLARx Executive Director and Maine Representative Sharon Treatpresented on the potential impact of the TPPA on access to affordable medicines in the US. Concerns included conflicts with the usual procedures followed by states and the federal government in Medicaid, 340B and Part B of Medicare, delayed access to generics, conflict with provisions of the Affordable Care Act, and locking the US into high market-based pricing of pharmaceuticals in the future. Similar concerns were raised by Vermont Governor and NLARx co-founder Peter Shumlin in a letter to President Obama. See Pharmalot storyquoting Rep. Treat and Prof. Sean Flynn's analysishere.

In the TPPA, according to an analysis of leaked textand analysis of a rather general public medicines white paper that was issued this week by USTR, the US has proposed provisions that would extend monopoly rights of pharmaceutical companies; would remove safeguards that allow patent applications to be challenged before they are granted; would allow patents to be granted for minor variations to existing drugs; and would provide extra rights for pharmaceutical companies in court.

The pharmaceutical industry is also lobbying for further restrictions on the use of clinical trial data by the manufacturers of generic medicines seeking to register their generic versions - turning to secret trade deals to prop up profits as their blockbuster drugs go off patent. Secret cables leaked by WikiLeaks confirm the industry's hands-on approach to USTR on these issues.

The Center for Policy Analysis on Trade and Health(CPATH) and other public health experts have called on trade officials to reverse course and protect health. CPATH's research established that intellectual property rules in the Central American Free Trade Agreement (CAFTA) raised medicine prices in Guatemala by up to 856%. The Austrialia-U.S. Free Trade Agreement authorized drug company intrusions into Australia's cost-effective drug purchasing system, resulting in increased prices for statins.

The US is also seeking investment provisions in the TPP agreement that would expose governments to legal action by foreign companies if governments introduce policies (including policies to protect public health) that affect these companies' profits. Similar trade provisions are the basis for a legal challenge by Phillip Morris to Uruguay's tobacco packaging warning label rules.

All of this is cause for real concern, and NLARx has called on USTR to act now to safeguard access to affordable medicines. Read more about trade agreements and pharmaceutical policy.

Will Supreme Court Tie States' Hands in Medical Records Privacy Efforts?

Yesterday, the United States Supreme Court struck down a Vermont law that limited the sale of physician-identifiable prescription data for marketing purposes. In a 6-3 decision in Sorrell v. IMS Health, the Court held that the law was a violation of the First Amendment's free speech protections. The decision is a huge disappointment to legislators who have sought to protect the confidentiality of private prescription records, not limited to the states of Vermont, New Hampshire and Maine, that have already adopted such laws, or Massachusetts which has considered adopting protections.

The information Vermont tried to protect comes from private medical records. It is being used to profile doctors to help drug companies in their marketing efforts. These records are not used in speech nor is the data in these records 'speech' as we have come to understand the term. The expansive decision by the U.S. Supreme Court, which extends new protections to commercial speech, should be a concern to anyone interested in keeping private information private.

Sean Fiil-Flynn, Associate Director of the Program on Information Justice and Intellectual Property at the Washington College of Law, served as counsel for amici NLARx and AARP in the case. Prof. Fiil-Flynn stated: "For the first time in the Court's history it has extended heightened First Amendment protection to the commercial trading of information that is neither from the public sphere nor destined for it. Vermont regulated only the commercial trade in prescription records that were purely for the purpose of targeting marketing to doctors to alter prescriptions toward more profitable outcomes." Read Prof. Fiil-Flynn's full statement.

What does this mean for the future of data privacy? This decision raises concerns that extend well beyond medical records. EPIC, the Electronic Privacy Information Center, filed a brief in the case focusing on the vulnerability of patient data to exposure despite the measures taken to de-identity records. The case is getting attention from internet privacy bloggers as well.

All may not be lost, at least with respect to medical records. Boston University law professor Kevin Outterson, who represented medical association amici in Sorrell, says in his blog "the Vermont statute suffered from self-inflicted wounds, namely some incautious comments in the preamble" and that "Vermont can fix the statute quite easily with the guidance given by the Court." He suggests one option would be to make the statute a narrow extension of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), giving the privacy right exclusively to the patient and a confidentiality right directly to the physician. Alternatively, he suggests, "Vermont can ban data mining by contract with participating pharmacies through Green Mountain Care," its newly-enacted single payer health program. Finally, Outterson suggests, Vermont could also clarify that pharmacies collect this information only as a state-mandated record.

Prof. Flynn agrees the Supremes may have left room for states and the federal government to address this issue though more targeted medical records laws, saying "The bright spot in the Court's opinion is its recognition that there is, in fact, an interest of governments in protecting the confidentiality of prescription records," and its reference to HIPAA, "which bans many commercial and other uses of medical records, but does not extend its protection to prescriber-identified prescriptions." His advice is to pass laws that "extend the protections of HIPAA to prescriber identified prescription (and other medical) records."

Interestingly, states already are going down this path as they look to implement electronic medical records. New Hampshire law says medical records are deemed the property of patient (§332-I:1) and Maine just enacted Public Law 2011, chapter 347, which gives patients the right to opt out of its electronic health records system. Both of these laws would need amendment to eliminate the loopholes that infect HIPPA, but they show states are already thinking about patient-centered control of medical records.

For more information on Sorrell v. IMS, including Supreme Court Briefs and the full text of the decision, please go here.

"Marketing Juggernaut" Collides with Children's Safety

"Marketing Juggernaut" Collides with Concerns About Safety and Appropriate Treatment as Legislators in Several States Review Policies Governing Children and Psych Drugs

Monday May 23rd, 2011

Sharon Treat, Executive Director, National Legislative Association on Prescription Drug Prices

At a time when sales and marketing of these drugs is growing exponentially, there is an increasing interest in reviewing the appropriateness of standards for prescribing antipsychotic drugs to children. As the N.Y. Times reports, "Even the most reluctant prescribers encounter a marketing juggernaut that has made antipsychotics the nation's top-selling class of drugs by revenue, $14.6 billion last year, with prominent promotions aimed at treating children." According to the Times, In the last few years, doctors' concerns have led Florida and California to put in place restrictions on doctors who want to prescribe antipsychotics for young children, requiring a second opinion or prior approval, especially for those on Medicaid.

Questionable practices in Texas led to a psychiatric preferred drug program for children being suspended in 2008. The issue has gotten the attention of state Medicaid medical directors, who released a study in July 2010 recommending that more states require second opinions, outside consultation or other methods to assure proper prescriptions. The report found a rapid increase in prescribing of these medications to children or adolescents over the past several years, and that children in foster care (12.4% percent) were prescribed AP medications at much higher rates than those not in foster care (1.4 percent).

The issue has gotten the attention of investigative reporters and doctors alike. See this Frontline Report and the article in the Journal of the American Medical Association on May 19, 2010, which reported children covered by Medicaid are far more likely to be prescribed antipsychotic drugs than children covered by private insurance, and Medicaid-covered kids have a higher likelihood of being prescribed antipsychotics even if they have no psychotic symptoms. Read more.

In Florida, as Pharmalot reports, the state’s Department of Juvenile Justice has ordered a review because of concerns about improper marketing and conflicts of interest leading to over-prescribing. “The questions recently brought to our attention are serious, and deserve answers based on a careful, thorough and independent review of the facts,” DJJ Secretary Wansley Walters tells the paper, which ran a two-part series about the problem (read here and here).

This year Maine Representative Joan Welsh sponsored LD 646," An Act to Ensure the Safety of Children in the MaineCare Program who are Prescribed Antipsychotic Medications." At the public hearing, a young women who had been prescribed multiple medications during many years in foster care gave wrenching testimony about her experiences. Testifying in support, Ann Woloson of Prescription Policy Choices noted that prescribing of psychiatric medications to children in the U.S. has increased dramatically compared to other countries: "In less than a ten-year period the use of potent psychotropic medication in children and adolescents grew by five-fold in the US, nearly double the rate than children living the Netherlands, Germany and other European nations. Some children as young as just one year-old, are being prescribed these medications at increasing rates. Behaviors once considered “normal”, a baby not sleeping through the night or a toddler going the terrible twos are now being diagnosed and medicated as “sleep resistant” or “oppositional-defiant, with mood swings”.

Read the LD 646 Testimony here:

PPC LD 646 Testimony(44 KB PDF)

April 25 Psych testimony foster kid(41 KB PDF)

Representative Welsh's testimony(44 KB PDF)

As amended, the LD 646 establishes a work group to consider the current case management and coordination of care for children in the MaineCare (Medicaid) program who are prescribed antipsychotic medications and to make recommendations for improvement. A positive vote out of committee is anticipated.

Georgia is also launching review of foster kids' psych drugs, after Representative Mary Oliver introduced legislation, House Bill 23, to require the Department of Human Services to establish regulations governing the use of psychotropic medications for foster children in state custody. House Bill 23 was put on hold until next year after the Casey Family Programs stepped forward with $75,000 to develop a pilot program to figure out the best way to conduct an independent clinic exam of children taking mind-altering drugs. According to an article in the Atlanta Journal-Constitution, Georgia spends $7.87 million a year on psychotropic medications. More than a third of foster children are prescribed the drugs, compared with about 4 percent of the general youth population."You are going to save money, and you're going to provide good medical care," said bill sponsor Rep. Oliver.

Data Mining: Could Furnace Info Really be More Protected Than Health Records?

Prescription Records Data Mining Case Could Have Broad & Counterintuitive Implications

by Sharon Treat, NLARx Executive Director

Is it possible that the U.S. Supreme Court could give greater deference to privacy, and greater protection from marketing uses, for records about who has gas furnaces in their homes, than for sensitive prescription records maintained by pharmacies pursuant to government directive?

It seems that could be the counterintuitive (nonsensical?) result if the Supreme Court upholds the Second Circuit decision in Sorrell v. IMS Health invalidating the Vermont prescription records privacy law. I attended the argument Tuesday where the Justices seemed to be voicing support of a prior decision shielding furnace records maintained for public safety purposes from being used for marketing, yet questioning the constitutionality of a Vermont law giving doctors the right to opt to have their prescribing records kept confidential and not used for marketing. Read the transcript of the argument.

You would think that doctors' privacy interest in medical records would clearly have a level of sensitivity and significance at least comparable with records of who has gas furnaces in their home. The distinction that one set of records is maintained by a government entity and the other by pharmacies at the command of government is as they say, a distinction without a difference. In this era of privatization and electronic health records, are we really saying that the only way government can act to protect its citizens' privacy interest in restricting the use of sensitive and personal information for marketing purposes is to directly carry out all functions that require the maintenance of records containing personal data?

Such a construction flies in the face of other privacy statutes including HIPPA and sounds like... socialized medicine.

It is also worth noting that much was made in the Supreme Court oral argument by IMS attorney Tom Goldstein that industry drug salespersons or detailers are conveying "100 percent" "truthful" information. Statements were also made that all communications are approved by the FDA. This is just not the case. It is ironic that these assertions seemed to be taken at face value when the record in the case showed otherwise, and on a day when newspapers reported on a trial involving misleading and illegal off-label marketing and FDA allegations of attorney coverups. Read about the case involving GlaxiSmithKline.

NLARx has sided with Vermont in the data mining case and submitted, with AARP, our own amicus brief supporting the Vermont law.

Here's what our counsel Sean Flynn has to say about the Oral Argument of Sorrel v. IMS Health in the Supreme Court: (This statement may be quoted or reprinted in part or full with attribution.)

April 27, 2011

"From the argument yesterday, it appears that a key issue in the case is whether regulation of access to government-mandated and government-possessed information are the treated the same under the First Amendment. Under the LAPD decision, the Court upheld a law that restricted access to identifying information in government records for marketing purposes, but not other purposes. The Court showed no inclination to question that holding in this case. IMS argued yesterday that the singling out of commercial marketing for access restrictions in Vermont’s law makes the law illegally discriminatory. Tom Goldstein, the IMS attorney, argued that the distinguishing factor from the LAPD case is that there the government held the information itself whereas in this case prescription records are merely government mandated but privately held. To fall under the LAPD standard allowing the government to block access to government information, including specific restraints from use for marketing, the prescription would have to be held at a government-owned pharmacy, Goldstein argued.

The IMS standard does not square with other federal data confidentiality laws. The Driver Privacy Protection Act, for example, forbids the trade of information from DMV records (government mandated information) even by third parties who later come in possession of the information.

The other big issue appears to be how the intent of the legislature figures. The Court appeared convinced that a primary purpose of the law was to restrain runaway drug prices caused by undue influence of pharmaceutical marketing. Can the state serve this goal through a law that deprives marketers of access to certain non-public information used as a marketing tool? The answer to that question turns on whether use of information to target marketing, as opposed to sharing the information itself, is a form of “speech.” If it is not speech, then the government can regulate it as economic activity for a variety of reasons, including to reduce overall health expenditures.

There was little discussion in oral argument of whether the use of confidential data to target marketing is itself speech. Many of the members of Court appeared to assume that it was, or at least that speech was effected by the law in such a way as to trigger First Amendment scrutiny. But this is new ground for the Court. that the But that issue is likely to figure prominently in any opinion. If every use of information is speech, a very broad range of information confidentiality protections could be threatened by the decision."

Fore more information contact:

Sean M Fiil Flynn

Associate Director

Program on Information Justice and Intellectual Property (PIJIP)

American University Washington College of Law
4801 Massachusetts Ave., NW
Washington, D.C. 20016
(202) 274-4157

202-294-5749 (cell)

Supreme Court Hears Case on State Prescription Record Privacy Laws

SUPREME COURT ARGUMENT TUESDAY IN FIRST AMENDMENT CASE ON MARKETING USES OF MEDICAL RECORDS
Legislators, Seniors, Consumers, and Doctors Among Those Filing
Friend-of-Court Briefs in Sorrell v. IMS Health

FOR IMMEDIATE RELEASE:
April 25, 2011

CONTACT:
Maine Rep. Sharon Treat
NLARx Executive Director
(207) 242-8558
streat@reducedrugprices.org

Meredith Jacob, Esq.
Prof. Sean Flynn, Esq.
NLARx Counsel
Program on Information Justice & Intellectual Property, Washington College of Law
(202) 274-4157
sflynn@wcl.american.edu

WASHINGTON, D.C. - The U.S. Supreme Court hears oral argument Tuesday April 26 in a landmark case, Sorrell v. IMS Health, balancing First Amendment free speech claims with the medical privacy interests of patients and doctors.

Vermont is defending its right to enact laws regulating the use of data on doctors' and other medical professional's prescribing histories for marketing purposes. Similar laws have been upheld in Maine and New Hampshire, and states around the country including Washington State and Massachusetts have considered adopting the privacy protections.

The National Legislative Association on Prescription Drug Prices (NLARx), a nonpartisan association of state legislators who support laws to make prescription drugs more affordable, has supported passage of the data confidentiality laws and joined with AARP to file an Amicus brief in the U.S. Supreme Court supporting the Vermont law.

"This is an important case with broad implications for states across the Nation. It pits privacy, specifically the privacy of health records, against assertions by corporations that they have free speech rights to use private data in marketing activities," said Sharon Treat, NLARx Executive Director. "State legislators have a strong interest in this case for reasons of protecting public health and the integrity of the doctor-patient relationship, preserving access to affordable health care, and insuring that private data about health status and diagnosis remains private," Treat stated.

The Sorrell v. IMS Health case is an appeal from a Second Circuit Court of Appeals decision overturning Vermont's prescriber confidentiality law on grounds of free speech. Similar laws in New Hampshire and Maine were upheld by the First Circuit Court of Appeals as constitutional and within the scope of state authority.

"A decision invalidating the Vermont law will affect the viability of the laws in its neighboring northern New England states, and a decision upholding the law will give a green light to states that are weighing whether to adopt similar patient and practitioner protections," said Rep. Treat.

Professor Sean Flynn of the Washington College of Law at American University and NLARx Counsel stated: "The Vermont law directly advances its interest in protecting against disclosure of records containing the most personal of information as well as its interest in protecting individual autonomy in decision making on important personal matters. Protecting the confidentiality of records advances important goals of our health system, including combating undue influence of in person pharmaceutical marketing that raises costs and damages public health interests."

In addition to NLARx and AARP, a separate friend of the court brief in support of the Vermont law has been filed on behalf of Public Citizen, the Center for Science in the Public Interest, Consumer Action, Public Good, U.S. PIRG, and New Hampshire PIRG; and another brief has been filed by the New England Journal of Medicine, the Massachusetts Medical Society, the National Physician's Alliance, and the American Medical Students Association. Read the briefs here.

Roundup of Legislation in the States

Legislatures Consider Variety of Measures Going in Different Directions

MISSOURI PBM BILL FACES STIFF OPPOSITION FROM EXPRESS SCRIPTS AND OTHER PBMS

Pharmacy firms fight proposed legislation

(Fort Scott Tribune, March 6, 2011) "Power politics have come to the foreground in the 96th General Assembly's review of proposed legislation to change the way medications are prescribed and provided." more

Here is a summary and link to the bill:

Missouri Senate Bill 236

[Note - Portions of this act are identical to SB 918 (2010). ] The bill covers several issues including electronic transmission of prescriptions, regulation of pharmacy benefit managers (PBMs) and their relationships with pharmacies, procedures for governing switch communications, informing patients of any cost sharing changes due to proposed switches of medications, and oversight of switch communication by the Department of Insurance, Financial Institutions, and Professional Registration. The act also specifies that a PBM owes a fiduciary duty to a covered entity and shall notify the covered entity in writing of any activity, policy, or practice of the PBM that directly or indirectly presents any conflict of interest. SB 236 also requires PBMs and health carriers to provide a website with a list of medications which require preauthorizations. Portions of this act are identical to SB 918 (2010).

WHILE ON THE OTHER HAND.... MAINE'S GROUNDBREAKING 2003 PBM PRICING DISCLOSURE & CONFLICT OF INTEREST LAW THREATENED WITH REPEAL

Maine's 2003 Pharmacy Benefit Manager law would be repealed if a bill introduced March 15, 2011 is enacted. The legislation,LD 1116, "An Act To Restore Market-based Competition for Pharmacy Benefits Management Services" is sponsored byRepresentative Meredith Strang Burgess and repeals the state's Pharmacy Benefit Manager Transparency Law, 22 MRSA 2699. The law bars conflicts of interest, kickback and self-dealing by PBM drug industry middlemen, and requires the value of rebates to be passed through to ultimately benefit consumers. Te law was amended in 2010 to give the Bureau of Insurance limited oversight authority over PBMs and to require the State Auditor to assist state agencies in contracting with PBMs.

SIX STATES CONSIDER EXTENDING PSYCHOTROPIC PRESCRIBING RIGHTS

Legislators in Arizona, Hawaii, Montana, New Jersey, Oregon and Tennessee are considering bills that would allow psychologists to prescribe psychotropic medications. But the measures are staunchly opposed by the American Medical Association, the American Psychiatric Assn., state physician organizations and others who maintain that the proposals would jeopardize patient safety. more

ON THE OTHER HAND, MAINE CONSIDERS TIGHTENING UP PRESCRIBING OF ANTIPSYCHOTIC MEDS TO KIDS

"An Act To Ensure the Safety of Children in the MaineCare Program Who Are Prescribed Antipsychotic Medications"

has been sponsored by Rep. Joan Welsh. You can read the bill here.

PENNSYLVANIA PHARMACISTS FIGHT MAIL ORDER MANDATES WITH LEGISLATION

WHYY NEWSWORKS, MARCH 7, 2011

"Pharmacists in Pennsylvania are battling against mail-order drug companies this legislative session. They are pushing for a bill in Harrisburg that would prevent insurance companies from requiring patients to get some of their prescription drugs filled via mail order. Pharmacists say customers should have a choice about where they fill their long-term prescriptions, such as medications for high blood pressure." more

NEW YORK PHARMACISTS ALSO TAKE AIM AT MAIL ORDER REQUIREMENTS OF PBMS

Pharmacists Fight the Rise of Mail Order
NY Times, By REED ABELSON and NATASHA SINGER
(March 3, 2011): "A fierce battle is being waged between retail pharmacists and mail-order companies over where people should be able to fill their long-term prescriptions. Community pharmacists in New York are lobbying state lawmakers to pass legislation that would prevent health plans from requiring patients taking medications for chronic ailments to fill their prescriptions through the mail... The proposed legislation, which was introduced in both state chambers in late February, would ban mandatory mail-order programs." more

WHILE BILLS IN MAINE WOULD REPEAL THE STATE'S GIFT DISCLOSURE LAW AND ACADEMIC DETAILING LAWS, OHIO, NEW YORK & ALASKA LEGISLATORS SEEK TO BEEF UP REPORTING BY DRUG COMPANIES

In Maine, pending legislation would repeal that state's current law requiring disclosure of gifts and marketing expenditures by drug companies a time when some Maine legislators are seeking to repeal Maine's gift disclosure law. The bill, LD 719, also repeals funding for academic detailing, reporting on clinical trials, and key price disclosure requirements that have helped the state become a national leader in negotiating steep rebates with the drug manufacturers. It isn't clear if this is simply a pharmaceutical industry bill or if the initiative is supported by the new Republican majority in the Legislature. Governor Lepage's budget also would repeal the groundbreaking MaineRx discount drug program, which PhRMA litigated all the way to the US Supreme Court (and lost).

At the same time, Ohio legislators are looking to beef up reporting in that state. Read more about the Ohio legislation here: Ohio Moves to Make Drug Companies Report Payments to Doctors; ProPublica, by Marian Wang, March 2, 2011: "Health care professionals in Ohio have received more than $13 million in payments from eight drug companies since 2009, according to our database. Now, a bill could require all companies to report these payments directly to the state."

New York also has pending legislation to require pharmaceutical companies that market prescription drugs in the state to report marketing costs annually. Senate Bill 2855 is similar to laws in the District of Columbia (§48-833.01) and the Maine law threatened with repeal (22 §2698-A) and would require the reporting of specified payments in excess of $75.00. In addition, SB 2855 seeks to eliminate the deduction of advertising expenses for purposes of determining "net income" under the New York Franchise Tax law for business corporations. more

Alaska Rep. David Guttenberg, a NLARx member, has introduced a comprehensive package of bills designed to reduce drug costs, including marketing disclosure:

· HB 42 addresses discount regulations by placing requirements on pharmacies and the Department of Health and Social Services.
· HB 43 requires the use of generic drugs when appropriate to lower costs.
· HB 44 establishes a prescription drug card program for discounts and allows the State to negotiate drug prices.
· HB 45 allows for savings through reporting of marketing costs.
· HB 46 establishes an Alaska Prescription Drug Task Force whose mission is to make recommendations on how to lower costs.
· HB 47 allows for public access to a database of clinical trials performed in Alaska. more info

NEW YORK GOVERNOR PROPOSES BIG CUTS IN EPIC, THE STATE PRESCRIPTION DRUG PROGRAM FOR THE ELDERLY

Gov. Cuomo has proposed cuts in EPIC, the New York prescription drug program for people age 65 and over. EPIC would no longer cover anyone who does not also participate in Part D. Of the current 307,700 enrollees, about 52,969 are not in Part D plans - (8/2009 figures) because they are in Medicare Advantage, a retiree plan, or not eligible for Medicare (immigrants without green cards for 5 years). As a result, 17% of current EPIC members would no longer be eligible for EPIC. In addition, EPIC would no longer cover drugs during the annual deductible period (21 out of 33 Part D plans in NYS in 2011 have an annual deductible). EPIC would no longer “wrap around” Part D to help reduce its costs. 52,000 (out of 302,000) enrollees who are not on Medicare or who have Medicare but have been excused from enrolling in Part D because it would jeopardize their retiree coverage, etc. In the end of 2009, out of 254,000 EPIC members with Part D, about 77,800 had “Extra Help” or the Low Income Subsidy, or fewer than one-third of those who have Medicare.

States Respond to Planned Drug Price Database

Secretary Sebelius Outlines Medicaid Pharmacy Options Including National Drug Price Database

At the January NLARx meeting, we heard from Mike Winkelman and Nell Geiser about several options for reducing Medicaid prescription drug prices, including moving to rebates based on aquisition costs rather than the widely used current standard AWP, or Average Wholesale Price. Last week, Health & Human Services Secretary Kathleen Sebelius wrote to the Nation's governors with a variety of Medicaid suggestions, including announcing the development of a national database of data on actual acquisition costs. If done properly, this national database could be a significant help to the states.

As we have pointed out before, an ongoing difficulty for states negotiating and enforcing drug pricing and rebates has been the lack of good information, which has allowed PBMs and drug manufacturers and wholesalers to skirt their "best price" obligations. For example, the Texas Attorney General has settled or won judgments for over $425 million in lawsuits against 13 drug companies for pricing fraud under the current system.

The National Association of Medicaid Directors has written a White Paper on drug pricing and the proposed shift from AWP to WAC. The medicaid directors have also emphasized the critical importance of pricing data that does not depend on self-reported information from the industry, as well as the continued potential for gaming of the system. They state:

"Wholesale Acquisition Cost" prices are currently available for many, but not all drugs. WAC may be susceptible to the same concerns that rendered AWP ineffective: it is a manufacturer-reported value not readily amenable to audit, and there is no reason for confidence that it could not ultimately be inflated well beyond any actual market price. Particularly since it has been defined in federal law as an "undiscounted list price" WAC would require continuous adjustments (markups or markdowns) by states based on acquisition cost surveys." [p.3, Executive Summary]

Secretary Sibelius notes that Alabama expects to save $30 million in one year by changing to a wholesale acquisition cost (WAC) baseline. Other states are starting to follow suit. Legislation, LD 346, was introduced in Maine this week to move to WAC pricing, and other states are expected to follow suit.

Excerpt from Secretary Sebelius' letter to Governors:

"Purchasing Drugs More Efficiently. In 2009, States spent $7 billion to help Medicaid beneficiaries afford prescription drugs. States have broad flexibility to set their pharmacy pricing. We are committed to working with States to ensure they have accurate information about drug costs in order to make prudent purchasing decisions. As recommended by States, the Department is undertaking a first-ever national survey to create a database of actual acquisition costs that States may use as a basis for determining State-specific rates, with results available later this year. Alabama, the first State to adopt use of actual acquisition costs as the benchmark for drug reimbursement, expects to save six percent ($30 million) of its pharmacy costs in the first year of implementation. We will also share additional approaches that States have used to drive down costs, such as relying more on generic drugs, mail order, management relating to over-prescribed high cost drugs, and use of health information technology to encourage appropriate prescribing and avoidance of expensive adverse events."

Free Trade Shouldn't Increase the Cost of Medicine

The National Legislative Association on Prescription Drug Prices (NLARx) endorsed a resolution calling on the U.S. to halt the use of trade agreements to enact international disciplines on pharmaceutical pricing programs. The resolution was passed at the Association's winter meeting in Washington, D.C.

NLARx is a nonpartisan, nonprofit organization of state legislators who work on health issues, with a particular focus on prescription drug pricing and access to medicines.

The resolution specifically targets the ongoing negotiation of the Trans-Pacific Partnership (TPP), a plurilateral trade agreement among eight nations. To date, no negotiating text has been publicly released. But the branded drug lobby has requested the inclusion of a chapter in the agreement that would require countries to "appropriately recognize the value of patented medicines" in public drug reimbursement programs and provide appeals for drug manufactures to challenge listing and reimbursement decisions of public health authorities.

As explained in the resolution, public health programs run by states, including the administration of Medicaid drug benefits for over 40 million Americans, use the same types of price restraining preferred reimbursement formularies (known as preferred drug lists, or PDLs) as foreign governments. Many federal programs, including drug programs for Medicare and veterans hospitals, achieve reductions on drug prices through similar preferred reimbursement programs.

"It is not in the best interest of the United States to promote limitations on the types of evidence-based drug pricing used by private companies, U.S. state governments, the U.S. Department of Veterans affairs - and by foreign governments - to control runaway pharmaceutical prices. At a time when health budgets everywhere are strapped, the federal government should not be promoting a new global regulatory agenda that would attack the most effective tools we have to combat excessive medicine prices in our health programs," said Sharon Treat, NLARx Executive Director.

The resolution recounts that these effective programs would be threatened by the kind of new international restraints on pharmaceutical pricing programs that the drug industry seeks:

"Trade Agreements are reciprocal by nature, and state government policies that violate the terms may lead to foreign government retaliation. The federal government may preempt state law thorough international agreements. And proposals to limit the operation of foreign reimbursement programs are likely to lead to increased foreign pressure to limit similarly operating programs in the U.S."

The first trade agreement to include a pharmaceutical pricing provision was the Australia-US FTA. That program required pharmaceutical company participation and appeal opportunities that state officials warned would cripple Medicaid if applied to states. More

The issue came to the fore again with the Korea - US FTA negotiation, during which the U.S. proposed language in the agreement that would prohibit Korea's "positive list" drug formulary. NLARx opposed that language, warning that such proposals would threaten Medicaid programs that use similar preferential purchasing lists to restrain drug prices. More

The USTR has not thus far backed down from its agenda to craft new international restraints on effective drug price controls. In a public statement in late September 2009, for example, Ambassador Kirk expressed his "support" for broadening the discussion of a proposal by Pfizer to promote new international rules that "discipline" pharmaceutical reimbursement programs in the U.S. and abroad.

The NLARX resolution will be transmitted to the USTR and to members of Congress. NLARx officials will meet with the USTR on January 31 to discuss TPP and drug pricing issues further.

For more on this issue, see the Forum on Democracy & Trade and PIJIP.