Australian price schedule rejected

By Phil Kabler
Staff writer

With six days to spare, the state Pharmaceutical Cost Management Council approved its major proposals for curbing soaring prescription drug costs on Thursday.

Council members backed off a proposal offered in August to adopt Australia’s deeply discounted prescription drug price schedule to negotiate state discounts from drug manufacturers.

Council chairwoman Shana Phares said the council was concerned that U.S. drug manufacturers could challenge use of the Australian price schedule as a violation of the U.S.-Australian Free Trade Agreement.

She also acknowledged some legislative leaders had expressed qualms about linking West Virginia drug discounts to any foreign price schedules.

As adopted Thursday, the council proposes the state negotiate prices based on the Federal Supply Schedule, the U.S. government discounts that are roughly 34 percent below drug prices currently available to the state.

Kevin Outterson, a council member and West Virginia University law professor, said that wouldn’t preclude a proposed state cabinet-level drug czar from citing Australian prices in negotiations with drug manufacturers.

“If we’re in negotiations and they won’t agree to the FSS, we can say, ‘Here’s the Australian price, which is 30 percent cheaper. Why?’ he noted. “The question will be, why can’t you offer that price as well to West Virginia?”

Outterson stressed that the price schedule is a “negotiating benchmark,” not a state-mandated price control, as some in the drug industry have complained.

“It is not a government fiat,” he said.

Phares said the council’s recommendations will be submitted to the Legislature today, ahead of a Sept. 15 deadline set in the Pharmaceutical Availability and Affordability Act, passed by lawmakers this spring.

When the bill became law, Gov. Bob Wise pledged to call a special session of the Legislature this fall to enact the council’s recommendations. Wise has since wavered on whether to call a special session.

Wise spokeswoman Jodi Omear said Thursday, “We need to look at the recommendations and discuss them with the legislative leadership before we decide if we’re going to call a special session or not.”

Asked about the chances for special session, Phares said, “I’m not an oddsmaker.”

If there is no special session, the Legislature would take up the council’s proposals during the 2005 regular session.

Among the proposals adopted Thursday:

• Consolidate all drug purchasing for all state agencies under the Cabinet-level pharmaceutical advocate.

  By consolidating just the state Medicaid and Public Employees Insurance Agency coverage, the advocate would have buying power for nearly 500,000 insurees — a number that amounts to more than half the 980,000 West Virginians who have prescription coverage through commercial health plans.

• Encourage private payers — primarily small- and medium-sized businesses — and individuals to join the state’s joint purchasing plan.
• Develop a common preferred drug list for PEIA, Medicaid, workers compensation and other state-managed prescription drug programs. Besides simplifying the process for doctors, hospitals, and other health-care providers, the single list would give the state more market share to negotiate drug discounts with individual manufacturers.
• Cooperate with other states on cost-control measures, including efforts to create multi-state purchasing groups.

As usual at the council’s meetings, the room Thursday was lined with drug industry lobbyists.

Afterward one of them, PhRMA state lobbyist Phil Reale, said that by focusing on drug costs, the state is failing to address the bigger health costs picture.

“The cost of prescription drugs is only one component — actually a small component — of health-care costs overall,” he said, contending that capping drug costs does not address the core reasons why per capita health- care costs are higher in West Virginia.

“We’ve got to improve community health in West Virginia, or we will forever be lagging behind other states in what we spend on prescription drugs,” Reale said.

To contact staff writer Phil Kabler, use e-mail or call 348-1220.