State Action

MICHIGAN-In an aggressive move to squeeze price discounts from the industry, Michigan recently released a list of pharmaceuticals, mostly generic and lower-priced, that will receive preferential reimbursement treatment from state health programs, particularly Medicaid. PhRMA, the industry's trade association, immediately filed a lawsuit to block the action. According to the Wall Street Journal, industry lawsuits have blocked similar actions in Maine and Vermont, and so far, six major pharma companies have refused to offer the state any price concessions. Leading the group are Merck and Pfizer, who stand to lose the most from the exclusion of their pain relievers Vioxx (rofecoxib) and Celebrex (celecoxib), respectively, from the list. What is especially chilling to the industry is Michigan's attempt to drive down all drug prices, not just those for Medicaid-funded therapies. If other states-or insurers-follow suit, billions in profits are at stake.

CALIFORNIA-In a similar but more flexible effort, California is working to create its own roster of preferred therapeutics for state funded health programs. But it plans to negotiate with individual companies; those offering the greatest rebates make the cut. With 1.3 million people in the state's Medicaid program, pharma companies are expected to participate in the voluntary program. Collectively, states will spend around $25 billion on Medicaid drugs this year.

WASHINGTON-Shrinking state revenues have motivated Washington to follow Florida's lead last year and initiate a prescription-review program that will limit Medicaid beneficiaries to four brand-name products a month. Unlike Florida, Washington bypassed its legislature and implemented the program under an administrative rule. According to state officials, the "Therapeutic Consultation Service" could save Washington up to $20 million in the first year and a half.