While the new Affordable Health Care law provides a variety of funding
opportunities for states, one provision in the health law that could
shift billions of dollars from cash-strapped states to the federal
government. Under the National
Medicaid Drug Rebate Program created by the Omnibus Budget
Reconciliation Act of 1990, drug manufacturers are required to enter
into agreements that provide rebates for Medicaid purchased drugs,
establishing a 15% minimum level of rebates. Up until now, the rebates
were divided between the states and the federal government. But under
the new health reform law, a significant portion of the rebates will go
solely to Washington beginning this year.
Policy Overview: Create a task force to study and report how best to maximize participation in 340B pricing, a provision of the Federal Public Health Act that authorizes discounted drug prices (below Medicaid levels) for certain populations and safety net health care providers, like rural hospitals, federally qualified health centers and prison populations. States have numerous options that should be studied and explored to ensure that populations and programs eligible for 340B pricing are receiving the reduced prices, resulting in savings for state budgets and consumers.
As part of our Shared Multi-State Agenda,
the Progressive States Network is working with legislators, advocates
and leading experts to promote Rx reforms in 2010 that will reduce
health care costs for consumers, businesses, and state and local
governments, and will help ensure access to safe and effective
medications. Through coordinated, strategic support, PSN and our
allies will be working to introduce and advance Rx reforms that will
help address state budget deficits and improve access to quality
medications in as many states possible; providing model legislation,
policy analysis, messaging and more - all of which has been gathered
and will be constantly updated on our Prescription Drug Reform Shared Agenda web page.
States are thinking more creatively about how to enable populations that are
ineligible for Medicaid to purchase drugs at the same reduced prices negotiated
Discount Programs:Maine Rx
negotiates with drug companies to provide more affordable drugs to
residents living below 350% of the poverty line. The program, as NLARx reports,
uses the leverage of the state's Medicaid program to achieve average
savings of 25-50% on generic and brand name drugs for residents not
eligible for Medicaid.
340B Pricing: Under
certain "safety-net" programs and providers can purchase
prescriptions at significant discounts, often below what Medicaid pays for
drugs. States can
ensure that populations and programs eligible for 340B pricing are
receiving the reduced prices.
Legislation in Massachusetts (H
2243) would require eligible health care centers to participate in
340B pricing, and Vermont's
comprehensive prescription reform act of 2007 requires the state to inform
residents of the availability of 340B pricing.
$287 billion -- that is how much the U.S. spent
on pharmaceuticals in 2007, representing a significant driver of health
care costs. While spending on hospital and physician care surpass
spending on prescriptions, drugs still account for 14% of all health care expenditures. Combine this with polls that show 70% of Americans believe the drug industry puts profits ahead of people, and it's no wonder that in 2008, at least 540 bills
and resolutions are being considered by states across the country to
reduce prescription drug prices, ensure the quality of medications
covered by public and private health plans, and reduce the undue
influence of pharmaceutical industry marketing - which itself tops out
at $30 billion each year.
Incremental steps to improve the health care system can lay the
foundation for comprehensive reform that provides health care for all.
Comprehensive reforms enacted in Massachusetts, Vermont, Maine and San Francisco were, in large part, the result of pragmatic incremental steps those states had already taken. For example, a Families USA report discusses the many reforms Massachusetts put in place over the years that led to its comprehensive 2006 reform. Not every state is as far along in moving comprehensive health care reform, but
each state does have numerous options for increasing access to
coverage, reducing the growth of health care costs, and improving the
quality of care.