Bill would give state leverage on drug costs

By Rebecca Cook

Associated Press

OLYMPIA — What if you needed an expensive prescription drug and couldn’t afford it?

Imagine you could visit two drug companies and tell them to compete for your business. Whoever offered the lowest price for your medicine would win you as a customer.

You’d probably get laughed out of their offices. But Washington state officials, representing the buying power of nearly 500,000 people, might be able to make such a deal.

That’s the idea behind a bill proposed by Rep. Eileen Cody, a Seattle Democrat and a Group Health nurse. If it passes — still a big "if" — the plan could eventually extend prescription discounts to many state residents.

Under House Bill 2431, the state would make a list of "preferred" drugs for many common illnesses. If a scientific panel said two medications work equally well, the state’s preferred drug would be the cheapest one. Pharmacists could substitute the preferred drug for more expensive alternatives unless the patient’s doctor specifically disallowed it.

Cody says the state can use the power of the list to negotiate lower prices with drug companies.

"We’re using market forces to help bring down costs," she said. "We’ll also improve patient care and make life better for doctors."

The bill has a special urgency this year because of the budget crisis.

The Legislature is struggling mightily to fill a $1 billion budget hole. At the same time, prescription drugs are costing the state Department of Social and Health Services $1 billion during this two-year budget cycle. The problem will only worsen, as drug costs are increasing at about four times the inflation rate.

Cody’s bill would apply first to about 500,000 Medicaid fee-for-service patients who get their health care through the state. After a year, local governments, private companies and people without insurance could join the preferred drug list plan.

Doctors, pharmacists and consumer groups have thrown their support behind Cody’s bill, support that was lacking when she introduced similar legislation last year and the bill failed.

Legislative leaders say the measure could pass if it helps the state save money.

The big question is whether the pharmaceutical industry’s powerful lobby will mobilize against it.

Pharmacist John Nguyen, who owns a small drugstore in south Seattle, said he supports any effort to attack high prices through the manufacturers.

"A lot of customers look at us as the scapegoat," Nguyen said. "The reality is the manufacturers are dictating how much we charge. … That’s where they need to start in order to cut costs."

Doctors generally dislike state efforts that might interfere with their doctor-patient relationships, and cringe at the thought of more government red tape. But Cody has tailored the bill to win their support as well.

"We expect this to save huge amounts of money, and we’re asking that that money be put back into the system," said Dr. Sam Cullison, a family physician in Seattle.

One provision important to doctors: if the drug they prescribe is not on the "preferred" list, all they have to do is write "do not substitute" on the prescription.

Most doctors will welcome the information about equivalent drugs, Cullison said, and welcome the change to help stave off the growing healthcare crisis.

"In a lot of situations, all the drugs are really the same," he said.

Hospitals and health maintenance organizations have used preferred drug lists, also called formularies, for years. But when a state considers doing the same, it raises hackles in the industry.

Pharmaceutical lobbyist Cliff Webster said this bill is better than the one Cody proposed last year, but he still sees problems.

"How realistic is this, to do this kind of wide-scale program?" he asked.

PhRMA, pronounced FAR-ma, the Pharmaceutical Research and Manufacturers Association, often fights fiercely against efforts to control prescription drug costs.

That was the case in Oregon, which last year implemented a plan similar to the one Washington is now considering. About two dozen PhRMA lobbyists swarmed the halls of the Oregon Legislature to oppose it, and the bill squeaked through in the last hours of the session after a strenuous battle.

Experts say it will save Oregon $7 million this year out of a total $885 million in drug costs. The state’s savings are expected to reach $17 million during 2003-05.

While members of both parties and Gov. Gary Locke support efforts to reduce prescription-drug prices, Cody’s bill doesn’t have a champion with the same clout as Oregon Gov. John Kitzhaber, a former emergency-room doctor who made the measure a pet project.

But House Majority Leader Lynn Kessler, D-Hoquiam, thinks the preferred drug list has a fighting chance — if sponsors can prove it will help the state’s bottom line.

"If the savings are there, it definitely is something we’ll look at," Kessler said. "We have this budget crisis, and the future costs of prescription drugs are also very daunting. We’re trying to get control."

The House Health Care Committee will hold a public hearing on House Bill 2431, which includes the preferred drug list, at 1:30 p.m. Tuesday in room C of the John L. O’Brien Building on the Capitol Campus in Olympia.

The Senate Health and Long Term Care Committee will hold a public hearing on Senate Bill 6368, the Senate version of the preferred drug list bill, at 3:30 p.m. Thursday in room 4 of the J.A. Cherberg Building on the Capitol Campus.

Copyright ©2002 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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