Posted At www.newsday.com
BY : Candice Choi
With spending on prescription drugs skyrocketing at three times the rate of the overall Medicaid budget, the state is now asking drug companies to pay to get on a "preferred drug list."
To get their drugs on the list, which is expected to implemented this summer, companies would have to subsidize the state with heavy rebates. The state Health Department estimates the legislation could save $200 million in its first year of operation.Most drug companies will likely pay to get on the list, said Craig Burridge, executive director of the Pharmacists Society of the State of New York.
A handful of companies might opt out, however, causing prescriptions of some popular drugs like Nexium to wane, he said.
While Nexium can run around $142.45 for 30 capsules, the over-the-counter version of the heartburn drug Prilosec costs around $36 for 28 capsules and treats the same problem. It is unlikely the makers of Nexium will lower the drug price, Burridge said.
To prescribe drugs that are not on the list, doctors would need prior authorization from the Health Department. But physicians would ultimately have the final say in which drugs to prescribe, said Robert Scher, president of the Medical Society of the State of New York.
"The process is meant to create a speed bump to discourage doctors from prescribing drugs that are more expensive and heavily advertised, but not necessarily any better," said Assembly Health Committee Chairman Richard Gottfried, a Manhattan Democrat.
Between 2002 and 2004, state Medicaid spending on prescription drugs rose at triple the rate of overall Medicaid spending. In the 2002-2003 fiscal year, Medicaid spending on prescription drugs in the state was $3.4 billion; that figure rose to $5 billion in the 2004-2005 fiscal year.
Overall Medicaid spending last year was $44.5 billion.
A committee is currently considering which classes of drugs to subject to the list, said Tom Fanning, director of division of policy and program guidance for the Office of Medicaid Management.
Thirty-one other states currently have preferred drug lists; those states have included categories like ulcer drugs and anti-convulsants.
"We can't speculate at this time how many (classes of drugs) it would be," said Rob Kenny, spokesman for the state Health Department.
Prices for drugs on the preferred drug list will be determined either by negotiating directly with drug makers or by banding together with other states to negotiate a price, Fanning said.
Several factors are causing the spike in spending on prescription drugs. The cost of ingredients for drugs is rising, and as the population ages the use of prescription drugs rises, Burridge said.
Between 1990 to 2000, personal spending on prescription drugs in the state rose from $2.97 billion to $9.83 billion, an increase of 230 percent, according to the New York State Conference of Blue Cross and Blue Shield Plans.
New York state has been relatively slow in adopting a preferred drug list to curb costs on spending on prescription drugs, Burridge said.
"It's a difficult piece of legislation. Any time that it seems you're diminishing Medicaid benefits, it's going to be a political third rail," he said.
