MI, VT Drug Partnership Squashed by Washington

February 24, 2004 (PLANSPONSOR.com) - It looks like the Detroit Tigers have a better chance of going to the World Series in 2004 than Michigan and Vermont's program to jointly negotiate lower prescription drug prices from pharmaceutical companies has of being approved by Washington.

Michigan Governor Jennifer Granholm said she was informed late last week that the Centers for Medicare and Medicaid Services was rejecting the program as a violation of federal procurement procedures. This came as a shock to the Democratic governor currently attending the National Governors Association meeting in Washington, who expected more support from a Bush administration that encouraged states to cut drug costs, according to an Associated Press report.

“We are just enormously frustrated at the lack of partnership Washington has been providing,” Granholm told the Associated Press. Overall, Michigan spends $600 million a year on Medicaid prescriptions.

Under the partnership, the states were given a rebate on prescription drug purchases of about 5% that was on top of the roughly 20% discount manufacturers provide to Medicaid programs. Michigan estimates savings on drug costs reached about $40 million in 2003, including $8 million from multistate bargaining. Yet with the uncertainty surrounding Washington’s disapproval, neither Michigan nor Vermont officials know whether they will be allowed to collect on the discounts they’re owed if the program should end.

Word of the apparent rejection of the joint programs was news toMary Kahn, a spokeswoman for the federal agency. Kahn said that as of yet, there had been no official response and that the program was still under review.