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Representative Sharon Treat, ME
The problem: Prescription drug prices are rising rapidly, putting the greatest strain on the uninsured.
New Yorkers spent nearly $16 billion on prescription drugs in 2004, 65 percent more than in 2000, and the costs continue to mount. [1] The 2.6 million New Yorkers without health insurance face the most arduous burden, paying 72 percent more than the federal government pays for many common drugs.[2] Even as the high costs force patients to forgo needed medications, pharmaceutical companies are making windfall profits and often spending more to market and advertise drugs than they do to research and develop them.[3]
New York has taken the first steps to reduce prescription prices by requiring the collection and online publication of data on drugs’ retail prices across the state and by establishing a preferred drug list for Medicaid. The preferred drug list encourages doctors to prescribe lower-priced but equally effective drugs by having Medicaid automatically pay for them without the prior authorization from Medicaid that is required for drugs that aren’t on the list. Maine’s RX Plus prescription drug program demonstrates how to build on these achievements and extend access to lower cost prescription drugs to the uninsured. Maine uses its Medicaid preferred drug list as leverage to secure discounts for low- and middle-income residents that average 25 percent for brand name drugs and 50 percent for generics.
The Maine Solution: Rx Plus
Maine’s prescription drug program, Rx Plus, includes the following features:
• The state is empowered to negotiate with pharmaceutical companies to secure rebates off the cost of prescription drugs;
• To encourage pharmaceutical companies to provide rebates, the state’s Medicaid program, MaineCare, is authorized to remove one or more of the drugs of any company that does not agree to participate in the program from its preferred drug list, requiring prior authorization before they can be prescribed. The names of non-participating companies are also publicized by the state;
• While rebates from the pharmaceutical companies are being negotiated and phased in, a first round of discounts is provided by retail pharmacies;
• Participation by retail pharmacies is voluntary;
• For its enrollees, Rx Plus functions as a wrap-around program, working in tandem with other health and drug benefit programs;
• Residents whose incomes fall below 350 percent of the federal poverty level are eligible to enroll;
• Higher income families with unreimbursed prescription drug expenses reaching five percent or more of family income or total unreimbursed medical expenses reaching 15 percent or more of family income are also eligible;
• There is no fee associated with Maine Rx Plus and no waiting period to enroll.
How Maine Passed the Law
State Rep. Sharon Treat, the sponsor of Rx Plus, credits the efforts of senior citizens’ groups and other activist organizations with propelling the issue of affordable prescription drugs to the top of the state’s agenda in 1999. Activists coordinated bus trips to Canada to buy prescription drugs and circulated a citizens’ petition to get comparably-priced drugs in Maine. Maine’s Clean Elections system, which freed many state legislators from the need to rely on campaign contributions from the pharmaceutical industry, also eased the bill’s passage.
The original bill passed by the Maine state legislature in April of 2000 mandated that all prescription drugs in the state be sold at Canadian prices or less. Declaring the measure too radical, Maine’s independent Governor Angus King refused to sign, calling on the legislature to send him a more modest bill. In response, the legislature overwhelming passed “Maine Rx” which was signed into law in May 2000.
The drug industry sued immediately. Their trade group, PhRMA, argued that the law violated the Constitution’s commerce clause as well as federal Medicaid law. They took the case all the way to the Supreme Court, which upheld the law in 2003. In the meantime, the state revised the legislation to help it withstand legal challenge: whereas the program had been open to all Maine residents, the new law restricted it to those with incomes within 350 percent of the federal poverty line or with high medical bills. PhRMA sued again but was thrown out of District Court. Maine Rx Plus went into effect in January 2004.
Negotiating discounts with the pharmaceutical companies has proved to be a difficult process, with the drug makers attempting to attach conditions and qualifications to the provision of discounts. As these negotiations continue to be worked out, however, participating pharmacies have offered the substantial discounts that Maine RX Plus beneficiaries enjoy today.
The Results So Far
A July 2005 survey of 36 frequently-prescribed drugs found average prices for Maine Rx Plus enrollees to be 50 percent lower than the regular cash price for generic drugs and 25 percent lower for brand-name prescriptions.[4] For some drugs the savings were more substantial still, including savings for breast cancer treatment Tamoxifen, which normally retails for $213.71 for 90 pills in Maine but had an Rx Plus price of $44.75.
On average, Maine Rx savings were substantially greater than those achieved by Ohio’s drug discount program, in which pharmaceutical companies voluntarily provide discounts to low-income residents. While Maine Rx prices still averaged more than drug prices negotiated by the federal Veterans Affairs Administration, or retail drug prices in Canada, in some cases Maine Rx actually achieved a lower price.
As of July 2005, 93,315 Maine residents had enrolled in Rx Plus, making up approximately 29 percent of the eligible population.[5]
Beyond Rx Plus
As State Rep. Sharon Treat noted, “states are constrained. And sometimes we come up with models that are based on those constraints… [Maine Rx Plus is] designed to fill around the edges of a failed federal policy.”[7] While there is widespread agreement that federal policy would be most effective at reining in excessive drug costs, Maine and other states have also taken a variety of approaches that can complement the Rx Plus model. Bulk purchasing of prescription drugs from multi-state and multi-program buying pools is one effective way to lower drug costs for Medicaid and other public programs. More closely regulating pharmacy benefit managers, and requiring more disclosure from pharmaceutical companies of their marketing and advertising practices, including gifts and free samples, are other promising strategies for containing prescription drug prices.
Additional Resources
DMI’s December 2006 Marketplace of Ideas event: Watch or listen to ME State Rep. Sharon Treat discussing the implications of her Maine Rx Plus legislation for New York with NY State Assemblyman Richard Gottfried; Jon Cohen, Chief Medical Officer of the North Shore-Long Island Jewish Health System; and Charles Bell, Programs Director for Consumer’s Union.
For more on Maine’s Rx Plus legislation see:
Sharon Anglin Treat and Stephen Sarno, “Cutting Drug Costs: Different Approaches, Different Results: Evaluating the Effectiveness of Voluntary and ‘Carrot and Stick’ State Drug Discount Programs in Ohio and Maine,” Prescription Policy Choices (2005)
Click here for text of Maine’s Rx Plus law.
For more on the burdens imposed by high prescription drug prices in New York, see:
Blair Horner and Tracy Shelton, “Paying the Price: The High Cost of Prescription Drugs for Uninsured Consumers,” New York Public Interest Research Group (2004)
For more state policy options on reducing prescription drug prices see:
The National Legislative Association on Prescription Drug Prices
For more on the work done by DMI’s Marketplace of Ideas panelists, see:
NY State Assemblyman Richard Gottfried
Charles Bell, Programs Director for Consumer’s Union
[1]“National Health Expenditures Data,” Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group
[2] Blair Horner and Tracy Shelton, “Paying the Price: The High Cost of Prescription Drugs for Uninsured Consumers,” New York Public Interest Research Group (2004)
[3] “The Choice: Health Care for People or Drug Industry Profits,” Families
[4]
[5] “Cutting Drug Costs.”
[6] Kimberley Fox, “Prescription Drug Access, Quality, and Affordability in
[7] DMI’s Marketplace of Ideas, December 11, 2006.