"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.

Drug Makers Continue to Flout "Best Price" Law, and Predictions are Compliance is About to Get Worse
By Sharon Treat, NLARx Executive Director

Yesterday New York Times reporter Robert Pear reported on drug makers' noncompliance with the federal law that requires reporting of pricing data and giving medicaid programs the "best price." the story, "Drug makers accused of ignoring price law," is here. Pear stated: "Drug manufacturers often flout a federal law that requires them to provide the government with pricing data needed to calculate discounts on medications prescribed for poor people under Medicaid, federal investigators say in a new report. The information is not submitted at all, is filed late or is incomplete, the investigators said, and as a result Medicaid overpays for prescription drugs." Pear noted that the problem, according to federal investigators, "could become more significant under President Obama’s new health care law, which increases the amount of the discounts and promises to add millions of people to the Medicaid rolls."

A new initiative is intended to force compliance. Daniel R. Levinson, the inspector general at the Department of Health and Human Services, who led the investigation, said he would impose civil fines on drug manufacturers that fail to meet their price-reporting obligations. Under federal law, the government can impose penalties of $10,000 a day on a drug manufacturer that fails to provide the information “on a timely basis.” The government has had this authority since 1990 but has not used it, the inspector general said.

We have previously discussed this issue and the problems raised by drug makers failing to provide data. We are aware of 3 states that have laws or rules requiring that these companies directly report this pricing data to their Medicaid programs - Maine, Texas and Vermont. We strongly urge all states to adopt enabling legislation that will give them direct access to this data - and the authority to penalize and bring enforcement actions - so that they can accurately determine whether the drug makers are sending back to them the full value of the rebates they owe the states. A model bill is posted on our website.

At our summer NLARx meeting in Portland, Maine, Jude Walsh, formerly pharmaceutical policy advisor to Maine Governor Baldacci and now with Goold Health Systems, presented in detail the issues facing states and the potential that they will lose significant medicaid funding due to lack of compliance and access to data.

According to the Pear article, Medicaid officials contend that “they do not currently have the resources” to identify all the manufacturers that fail to submit the data. This is all the more reason for states to act. We are talking about really significant cost increases, at a time when states cannot afford even to pay the costs they currently incur. For example, according to Ms. Walsh's presentation, the State of Maine gets back about 50% of the cost of its medicaid drug purchasing through aggressively negotiating supplemental rebates. Luckily, Maine already has a law giving it authority to collect pricing data and bring enforcement actions for failure to comply. What about YOUR state?

Sharon Treat
www.reducedrugprices.org
207.622-5597