Montana wants all residents to get Medicaid drug discounts

A federal court, however, has nullified similar drug pricing programs in other states.

By Doug Trapp — Posted Dec. 28, 2010

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Montana Gov. Brian Schweitzer wants to provide less expensive drugs to all Montana residents by allowing them to enroll in Medicaid, but a federal court struck down comparable drug discount programs in Vermont in 2001 and in Maine in 2002.

Schweitzer, a Democrat, plans to ask the Centers for Medicare & Medicaid Services for a waiver to allow the Medicaid prescription drug coverage expansion because it would provide a 55% discount on drug retail prices. He unveiled the effort on Nov. 16 and dubbed it "Medicaid Part D," after the similarly-named Medicare prescription drug benefit.

Residents' participation in the Montana program would be voluntary and not capped, according to the draft waiver request. Privately insured people could opt for the Medicaid discounted drug price or their private co-pay, whichever is less costly. Medicare beneficiaries in Montana also could participate and would save 46% on prescription drugs compared with Medicare Part D prices. People with coverage from the Dept. of Veterans Affairs would be eligible, too.

A finalized waiver request could be ready by spring 2011, said Schweitzer's Health and Family Policy adviser, Jessica Rhoades. CMS has no deadline to respond to waiver requests. Medicaid drug discounts are available because Congress created the Medicaid Drug Rebate Program in 1990. It requires pharmaceutical companies to sell drugs at a discount to Medicaid programs for states to receive federal Medicaid funding for outpatient drugs.

A few states have sought to extend that benefit to residents outside Medicaid. Vermont received approval from the Dept. of Health and Human Services for its Pharmacy Discount Program in November 2000. The program extended an 18% discount on drugs to Medicare beneficiaries earning up to 150% of the federal poverty level and anyone without drug coverage who earned up to 300% of poverty, a total of about 70,000 people. The state billed drug manufacturers for the difference between the retail and discounted prices.

The Pharmaceutical Research and Manufacturers of America sued to block the Pharmacy Discount Program. In June 2001, the U.S. Circuit Court of Appeals for the District of Columbia ruled that the program was invalid because it did not require Medicaid funds to be spent and did not produce savings for the state's Medicaid program, but only for people outside Medicaid.

In January 2001, Maine approved the Healthy Maine Prescription Program -- an effort similar to Vermont's -- available to state residents earning up to 300% of poverty. Because of the ruling on the Vermont program, Maine agreed to pay about 2% of the Medicaid drug discount. But that didn't satisfy the court. The same appeals court in December 2002 struck down the Maine program in response to the PhRMA lawsuit. About 110,000 Maine residents had been enrolled.

Rhoades said Montana's program would be different because Montanans would be enrolled in Medicaid, if only for the drug coverage.

The Montana Medical Assn. hasn't yet formed an opinion of the proposal, said MMA Interim Executive Director Linda Edquest. "We're just kind of waiting to find out what's going to happen." The MMA would become more involved if CMS indicates the proposal could be approved, she said.

More information about the Montana proposal is available online (link).

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