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Louisiana Treasurer: Discount Senior Drug Plans

Wed, 10/18/2000 - 12:00am — Karen Stevenson
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Louisiana's Treasurer says state government could save as much as $90 million a year by negotiating lower prescription-drug prices for the poor and elderly. He said the state could pool its prescription-drug needs and demand the kind of drug discounts enjoyed by federal agencies, and that this approach might save between $30 million and $90 million in drug costs in the Medicaid health-care program for the poor funded in part by the state.

But Secretary of Health and Hospitals David Hood said the state considered making bulk drug purchases for Medicaid a few years ago but it wasn't cost-effective. Hood said Louisiana gets about $85 million a year in rebates from drug makers for medicines dispensed to Medicaid recipients and that the state would lose those rebates if it pursued Kennedy's idea, and that would wipe out other savings.

The president-elect of the Louisiana Pharmacists Association, Allen Cassidy, said his organization probably would support Kennedy's idea as long as patients could buy medicines at regular drug stores, but his group wouldn't want to see a mail-order program. One problem with Kennedy's idea is that many pharmacies, including many of the larger chains, don't purchase drugs directly from manufacturers. They buy drugs from wholesalers, so it's not clear how discounts would filter from manufacturers to retail purchasers.

Kennedy said he doesn't know the details of how his proposal would work, but he is confident some savings would trickle down. The treasurer said similar efforts are under way in at least 10 states.

Kennedy said Louisiana has seen a tremendous increase in what it pays for prescription drugs through the Medicaid health-care program for the poor. The total has gone from $80 million in 1989 to $370 million this year, he said. If costs continue to increase at the same rate, costs could hit $800 million a year within the next five years.

Louisiana's Treasurer says state government could save as much as $90 million a year by negotiating lower prescription-drug prices for the poor and elderly. He said the state could pool its prescription-drug needs and demand the kind of drug discounts enjoyed by federal agencies, and that this approach might save between $30 million and $90 million in drug costs in the Medicaid health-care program for the poor funded in part by the state.

But Secretary of Health and Hospitals David Hood said the state considered making bulk drug purchases for Medicaid a few years ago but it wasn't cost-effective. Hood said Louisiana gets about $85 million a year in rebates from drug makers for medicines dispensed to Medicaid recipients and that the state would lose those rebates if it pursued Kennedy's idea, and that would wipe out other savings.

The president-elect of the Louisiana Pharmacists Association, Allen Cassidy, said his organization probably would support Kennedy's idea as long as patients could buy medicines at regular drug stores, but his group wouldn't want to see a mail-order program. One problem with Kennedy's idea is that many pharmacies, including many of the larger chains, don't purchase drugs directly from manufacturers. They buy drugs from wholesalers, so it's not clear how discounts would filter from manufacturers to retail purchasers.

Kennedy said he doesn't know the details of how his proposal would work, but he is confident some savings would trickle down. The treasurer said similar efforts are under way in at least 10 states.

Kennedy said Louisiana has seen a tremendous increase in what it pays for prescription drugs through the Medicaid health-care program for the poor. The total has gone from $80 million in 1989 to $370 million this year, he said. If costs continue to increase at the same rate, costs could hit $800 million a year within the next five years.