By Patrick Donges
http://stream.publicbroadcasting.net/production/mp3/wamc/local-wamc-978157.mp3
Pittsfield, MA – Massachusetts junior Senator Scott Brown is the lead sponsor of Senate bill 1356, referred to as the Affordable Medicines Utilization Act of 2011.
Beginning in fiscal year 2012, the bill would allow states to retain a rebated amount equal to 50 percent of any savings incurred by their Medicaid programs by substituting generic prescriptions for brand names where the option exists to do so.
According to a statement from Brown's press secretary Colin Reed sent via email, the legislation is not "prescriptive," meaning that states can achieve savings in their Medicaid prescription drug programs by choosing the policies that work best for them that result in a higher utilization of generics.
While Brown and fellow Republican Sen. John McCain of Arizona are sponsors, they tout bi-partisan support from Democratic Sen. Ron Wyden of Oregon.
A joint statement on the proposal released July 13 from the three legislators cites a study published by conservative think-tank the American Enterprise Institute, or AEI, titled "Overspending on Multi-source drugs in Medicaid," which found that in 2009 states spent approximately $329 million more than necessary on brand name drugs. Alex Brill is the author of that report.
"For about 20 drugs that we studied, there were numerous occurrences whereby Medicaid was reimbursing for the more costly version of a particular drug."
"The optimist would say that Medicaid got it right at least four out of five times; in other words for about four out of five prescriptions filled for these 20 multi-source products Medicaid was reimbursing for the lower cost, and in that sense they were saving taxpayers a lot of money. However, for the remaining occurrence, there was overspending."
While there is other research being done by AEI on the possibility of differences in brand names vs. generics, Brill said his research is done under the Federal Drug Administration's policy that generics are equivalent to their branded counterparts.
Calling the proposed policy a "very good idea," Brill said an important finding of his research was that some states already have a leg up on the utilization of generic drugs.
"One of the things that came from the research is a significant amount of variation across states. If it was the case that in every state there was a sort of uniform behavior and a lot of brand versions of multi-source drugs being prescribed, I'd wonder if we could ever fix this problem. But in fact what I saw is that some states are doing very well and other states are doing very poorly, which says to me that there's an opportunity for those who are spending more than they should to learn from their neighbors."
"In particular, Massachusetts actually is one of the states that does very well in making sure that the lower costs drugs are prescribed when appropriate."
Massachusetts already has policies in place that encourage practitioners to prescribe generic drugs. Dr. Paul Jeffrey is the Director of Pharmacy for MassHealth, the state's Medicaid program.
"Massachusetts has had a law in place since the mid 1980s requiring pharmacists to substitute with generic drugs when a generic drug is available, so Massachusetts has long led the nation in that."
"The Massachusetts Medicaid program over the past 10 years has taken numerous steps to encourage the prescribing and dispensing of generic drugs, and today we're one of the top one or two states in the nation."
He said over the last decade the state's Medicaid program has gone from a rate of 48 percent generic utilization to 83 percent.
The AEI report affirms that claim, putting Massachusetts among those states that overspent the least in 2009, with the state spending only about $1.20 more per Medicaid enrollee on brand names.
New York did slightly worse, overspending by just less than $4 per enrollee, but Vermont topped the chart, spending over $30 more than necessary per enrollee on brand name prescriptions.
Jeffrey said that while he has not had any formal discussions with Vermont officials about using Massachusetts as a model for generic utilization, he said there is always talk among Medicaid administrators about how to use more generics.
"There are networking opportunities; in fact as we speak I'm at the American Medicaid Pharmacy Administrators Association Annual Meeting."
"At meetings like this we speak specifically about the types of policies and procedures that the various states use to encourage cost effective, appropriate therapeutics for our members. My colleagues have heard me speak about, either formally or informally, our processes to encourage increased generic utilization."
"There's not a good reason, in my estimation, why other states couldn't do some of the things that Massachusetts has done."
Jeffrey said there may be political considerations in those states, like lobbying efforts by the pharmaceutical industry and care advocates preventing those types of policies from being enacted.
While Brown was not available for comment on the legislation Monday, one of the Democrats vying for the chance to run against him, Newton Mayor Setti Warren, said that while he welcomed a conversation on health cost cutting measures, the generics proposal would not realize as much cost savings as some other reforms he is advocating for, including allowing Medicaid programs to purchase drugs from other countries.
Warren also said the proposal could run up against Brown's stance against health reform policy championed by President Barack Obama.
"Repealing the Affordable Care Act would add $230 billion to the federal deficit over the next 10 years. So we've got to get really serious about solutions to lower the cost of health care, that's what I'll be focused on."