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HCFA, States Work at Increasing Prescription Drug Access in Medicare, Medicaid

Nancy Tarleton Landis

With debate over a Medicare prescription drug benefit expected to continue in Congress, the federal government announced a pilot project to study the effects of such a benefit. Meanwhile, states are moving ahead with their own plans to make drugs more affordable.

Mine workers demonstration project. The three-year Medicare pilot project with the United Mine Workers of America (UMWA) Health and Retirement Funds will begin July 1. The Health Care Financing Administration (HCFA), which administers Medicare, will pay UMWA 27% of the annual cost of providing a prescription drug benefit. About 60,000 Medicare beneficiaries are covered by the UMWA funds. The plan currently offers a drug benefit through AdvancePCS.

"The demonstration will provide a unique opportunity for HCFA to test how providing, structuring, and managing outpatient prescription drugs can contribute to providing traditional Medicare benefits more effectively and efficiently," HCFA official Robert A. Berenson said in a statement. "An added benefit of the demonstration is that we can learn how effective management of a pharmacy benefit will reduce Medicare spending."

President Bush's proposal to Congress in January for block grants to states to provide an "immediate helping hand" with prescription drug costs met with criticism from both Republicans and Democrats. Issues in the design of a drug benefit for Medicare were discussed during Senate hearings that confirmed the appointment of Tommy G. Thompson as secretary of the Department of Health and Human Services; see the February Legislative Affairs Summary.

The project will look at the mandatory use of generic products when available, as well as "the use of preferred pharmacy products" and drug-use reviews. The cost-effectiveness of disease management models for certain chronically ill beneficiaries will also be evaluated, Berenson said.

The drug benefit study will be added to an ongoing project testing ways of providing Medicare benefits to UMWA fund enrollees. HCFA will examine the effects of the new benefit on the use and costs of services provided under both Part A (hospital inpatient care, skilled-nursing facilities, home health services, and hospice) and Part B (outpatient services and supplies) of Medicare.

Maine discount program. Maine residents have a new opportunity for help with the cost of prescription drugs under a recent Medicaid waiver. The Maine Prescription Drug Discount program, set to begin in July, will enroll residents with incomes up to 300% of the federal poverty level. After paying an enrollment fee expected to be about $25, participants will be able to obtain outpatient prescription drugs at an estimated 15–17% below the Medicaid price. The rebate paid to Medicaid by manufacturers will be passed on to the pharmacies filling prescriptions for enrollees.

Beth Ketch, Maine spokeswoman for the program, said details are being worked out. Federal Medicaid officials have spelled out the terms and conditions of the waiver and will have to give final approval to program rules put in place by the state.

Ketch said state officials hope to keep the enrollment process simple. Enrollment forms will be available at community pharmacies and physicians' offices, she said. In addition, the state plans to mail the forms to people already receiving partial Medicaid services.

An estimated 200,000 Maine residents will be eligible. Under state legislation passed last year creating the Maine Rx Program, some 350,000 residents would have qualified for discounts negotiated by the state with drug manufacturers. That program was challenged in court by the Pharmaceutical Research and Manufacturers of America (PhRMA). A federal judge blocked enforcement of the law, the state challenged the injunction, and at press time the court case was pending. A December announcement by the Maine department of human services said the Maine Rx start date had been delayed from January 1 to April 1, 2001.

Several other states have new pharmaceutical assistance programs for the elderly and others without drug coverage. The National Council of State Legislatures maintains a list of these programs.

Ketch said not enough companies had agreed to the Maine Rx rebate program that the intended savings to consumers could be achieved. Most manufacturers are waiting for the outcome of the court case before signing agreements with the state, she said. In contrast, the Maine Prescription Drug Discount Program will offer "significant savings immediately."

Vermont discount program. The new Maine program is similar to one that began in Vermont January 1. PhRMA unsuccessfully challenged the Medicaid waiver facilitating the Vermont program.

Prescriptions from Canada. In another approach to making medications more affordable, a health system in Maine has set up an agreement whereby patients save money by having prescriptions filled in Canada. Miles Theeman, chief operating officer of Affiliated Healthcare Systems (AHS), said that a pharmacy in the Canadian province of New Brunswick would in February begin filling prescriptions and mailing them. AHS is a for-profit subsidiary of Eastern Maine Healthcare, based in Bangor.

The agreement is not affected by the December announcement by then-Secretary of Health and Human Services (HHS) Donna E. Shalala not to develop regulations implementing the provisions of the recently signed drug reimportation law. Shalala, in a letter to the president, stated that flaws and loopholes in the provisions prevented her from showing Congress that the reimportation of prescription drugs would be safe and cost-effective—a requirement imposed on the secretary. The issue is now one for the new Congress and HHS Secretary Tommy G. Thompson to consider. As for the effect on AHS’s program, Theeman said, "The day that bulk reimportation begins, there will no longer be a demand for our business, and frankly we'll gladly shut the doors."

Theeman anticipated that 100 physicians in Eastern Maine primary care practices would become licensed in New Brunswick and thus authorized to have prescriptions filled in Canada for their patients. "As consumers hear more about this and ask their individual physicians about it, more physicians will enroll," he said.

"We've established a list of drugs on which we know patients can save a minimum of 10%, including postage, by purchasing from Canada," Theeman explained. "We've been fine-tuning the list as we get daily inquiries from patients and physicians about whether this drug or that is available. The intent is to benefit people who have no insurance coverage for drugs or are on long-term maintenance medications. I think 80% of our business will come from a relatively small number of brand-name drugs that clearly are much more expensive on the U.S. side.

"We have a very tight quality assurance system," Theeman added. "We will sell only same-name, same-strength, same-manufacturer products as are available in the United States, unless the physician approves otherwise."

Asked whether he knew of other such programs, Theeman said, "We're not the first. There is a model in Vermont that has been doing this for over a year. We've been told about pharmacies working with other organizations in the western United States and western Canada."

Internists' Group Weighs in on Health Care Coverage

The American College of Physicians–American Society of Internal Medicine (ACP-ASIM) has developed a set of 14 core principles that highlight for policymakers the most critical issues to address in proposing ways to increase access to affordable health care.

Among the principles on health insurance coverage is one calling for the creation of mechanisms to make prescription drugs more affordable. ACP-ASIM objects to formularies that bar patients from obtaining the best drug available to treat a medical condition. The organization also wants privately owned pharmacy benefit managers to adhere to consumer protection standards and wants public policy to address the use of cost-saving purchase methods by Medicare.

Other principles cover financing, patient rights and satisfaction, health disparities and disease prevention, and patient rights, system accountability, and professionalism. As part of patient rights and satisfaction, ACP-ASIM calls for decisions on whether to expand the scope of practice of nonphysician health care professionals to be made on the basis of evidence that these practitioners have the requisite skills and training.

The principles extend the ideas first proposed by ACP in a 1990 public policy paper. (ACP and ASIM merged in 1998.)