Senate Votes to Expand Drug Cost Cuts of Medicaid

The Senate voted on Thursday to help states try to reduce prescription drug prices, despite fierce opposition from the pharmaceutical industry, which is locked in litigation with several states. The Senate approved 56 to 43 a measure making clear that states may use the purchasing power of their Medicaid program to negotiate drug discounts for people who are not poor enough to quality for Medicaid.

About a dozen states have established lists of preferred drugs and refuse to pay for other medicines unless a doctor obtains prior authorization from state officials. Faced with this requirement, doctors tend to prescribe less of the medicines, so sales plummet. "Preferred drug lists are the most effective tools available to states," to control spending on prescription drugs, said Gov. John Engler of Michigan (R). Meeting in Idaho, the National Governors' Association said it was "extremely disappointed" with the drug industry's tactics.

Sen. Debbie Stabenow (D-Mich.), the chief author of the proposal, said it was meant to encourage state efforts to make prescription drugs more affordable. "We are saying yes to the innovation of the states," Stabenow said.

The Pharmaceutical Research and Manufacturers of America, a trade group for brand-name drug companies, has gone to court to stop drug discount programs adopted in Maine, Vermont, Florida and Michigan, among other states. The organization denounced the proposal, saying it could embolden more states to try to control drug costs by restricting access to certain medicines for low-income people.

The White House announced its opposition to a separate proposal by Sens. Charles Schumer (D-N.Y.) and John McCain (R-Ariz.) to expand access to low-cost generic copies of brand-name prescription drugs. The Congressional Budget Office says the Schumer-McCain bill would save the nation $60 billion and reduce federal spending on prescription drugs by $5.9 billion over the next 10 years. The White House predicted the bill would increase litigation, raise costs, and reduce access to new drugs. Schumer said the administration's statement "makes it seem as if they are becoming a mouthpiece of the pharmaceutical industry."

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