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Leading pharmaceutical company attacks the House GOP prescription drug plan

February 21, 2001
By: Jennifer Ginsberg
State Capital Bureau

JEFFERSON CITY - A leading pharmaceutical trade group has attacked a state GOP plan to provide prescription drug relief for the elderly.

The Pharmaceutical Research and Manufacturers of America said forcing lower prices on drugs for Missouri seniors, as proposed by House Republicans, would impede research by imposing additional price controls on pharmeuctical companies.

Jackie Cottrell, a spokeswoman for the Washington-based association of drug makers, also said the GOP proposal seeks to go beyond the original purpose of Medicaid to assist the low income by including higher-income elderly.

Under the current system, an elderly person must meet the relatively low income standards of Medicare to qualify for the discounted prescription drugs.

Currently, the only seniors who qualify for discounted prescription drugs are those who qualify for a Medicare supplement, receive Medicaid, or who are in a Medicare HMO.

Currently, slightly more than 86,000 elderly Missourians benefit from the prescription drug discount, according to figures from the departments of Insurance and Social Services. Republicans estimate as many as 500,000 elderly Missourians could benefit from their plan -- which would require a waiver from the federal government.

Holden's budget office estimates the price discounts would save the average senior $480 per year.

This plan would force drug companies to sell their products at the lower prices for more seniors, not just those who qualified for the Medicare supplement with prescription drug benefits.

The drug industry argues such a waiver would violate the intent of the federal program by benefiting those other than Medicaid recipients.

The drug-industry group targeted a similar program in Vermont last year, filing a complaint in federal court that is still pending.

In the Vermont case, PhRMA alleged the waiver issued by the Health Care Financing Administration was a misuse of Medicaid because it did not further Medicaid's original purpose, which is to help low-income people.

HCFA administers Medicare, the program that provides discounted health care to senior citizens and Medicaid, the program that provides discounted health care and prescription drugs to low-income people.

Republican supporters argue that the program simply seeks to have drug companies extend a price already offered to some elderly.

"We're asking them (drug companies) to offer that sale price all the time, in Medicare as well," said Rep. Jon Dolan, R-Lake St. Louis.

The plan would discount drugs by utilizing the state's purchasing power under Medicaid and give seniors an extra discount under the National Pharmaceutical Medicaid Rebate program, said Rep. Patrick Naeger, R-Parryville, who is sponsoring a bill to promote the Republican plan.

"This program is a big discount, a blue light special for health care and drugs. We're buying on sale, and taking the savings and giving it to others to buy on sale," said Dolan. "We're talking about purchasing power. We're talking about helping people."

But, Cottrell said the Medicaid program should not be used for seniors in the way the Republicans want.

"The waiver is the wrong prescription for this problem. It does nothing to help seniors. It doesn't provide them prescription drug coverage," Cottrell said.

"We think the right answer is prescription drug insurance," Cottrell said. "Coverage is the answer."

If this proposal is passed, and HCFA grants the state a waiver, "Missouri seniors would be able to sign-up for this plan at their local pharmacy and begin receiving their discount and up-front rebate on each and every purchase," Naeger said.

Naeger said the Republicans' plan was a good start.

"This doesn't make anyone else's plan bad," Naeger said. "But every other plan out there takes money, sometimes it takes money that we sometimes don't know that we have."

Making prescription drugs more affordable for seniors has been an ongoing issue at both the national and state level.

In his State of the State address in January, Gov. Bob Holden said prescription drug relief for seniors was one of his "highest priorities this year."

His proposed plan would give seniors and disabled Missourians on Medicare or Supplemental Security Income, who do not have insurance coverage for prescriptions, an opportunity to buy their medications at reduced rates, up to 20 percent less then they are paying now.

About 300,000 Missouri elderly would benefit from the cost reductions, said the governor's budget director, Brian Long -- about the same as the GOP plan.

Under the Republicans' "Missouri Senior Rx Plan," a proposal that some Democrats say is similar to Holden's, a person 65 years and older, who is Medicare eligible and earns less then $25,770 a year would be eligible for a prescription drug rebate.

Under the plan, each time a senior citizen bought prescription drugs, the pharmaceutical company would give a rebate to the state, while seniors would see a 30 percent rebate at the pharmacy counter.

Supporters said such a cycle would then pay for itself, and not require any outside money from taxpayers.

In an example provided by Naeger, a drug with a current retail price of $120 would be reduced to $95, a $25 savings.

Naeger claims his plan would provide seniors a 10- to 20-percent discount.

Rep. May Scheve, D-St. Louis County, said this was not a new plan but rather an issue that Democrats have already addressed -- and continue to address.

"The Republicans are trying to pass it off as their own," Scheve said. "This is definitely a hot topic that they would want to capitalize on."