The Prescription Drug Wars

Can Minnesota rein in prescription costs?

Back at the end of January, the Minnesota Senior Federation launched a program to allow its members to buy their prescription drugs at prices dramatically lower than U.S. retail. Their doctors would simply need to mail or fax prescriptions to CanadaRx, a Toronto-based pharmacy that exports drugs to patients south of the border. The savings would vary depending on the drugs ordered, but one sample of a dozen commonly prescribed medications cost 62 percent less than in the Twin Cities. The public response was immediate and immense. The new program spurred 1,000 new people across Minnesota--not all of them over age 50--to join the Senior Federation. According to Peter Wyckoff, executive director of the federation's metro region, "It's been an amazing success. We're looking at profound savings that we've negotiated, or that the Canadian government has negotiated and we're taking advantage of."

The program's immediate popularity speaks to the overwhelming need to rein in the spiraling prices of prescription drugs. A small-scale import program like this isn't a systemic fix--and some unexpected problems have already cropped up. British pharmaceutical concern GlaxoSmithKline, maker of some of the world's most popular drugs, has stopped shipping its products to Canadian pharmacies that export to American consumers. While the step hasn't yet hindered the federation's program, there may be problems if other drug makers follow suit.

But the import program, and Glaxo's boycott, might yield a useful side effect. "It's really galvanized the issue of prescription drug costs," Wyckoff says. And perhaps that's just what's needed to get some substantive policy changes to pass the Minnesota Legislature this year, despite a track record that has been, in Wyckoff's words, a "perpetually losing battle." In mid-February Rep. Fran Bradley, a Republican, introduced legislation that would allow lower-income Minnesotans with no prescription coverage to buy their drugs at the same discounted price as residents on Medical Assistance--a savings of 15 to 20 percent. Pharmaceutical companies would be obliged to eat the difference.

It's not the first time such a measure has been introduced. In 2001 when DFL senator John Hottinger introduced a similar bill, it passed the Senate easily on a bipartisan vote but was killed in House committee. Bradley admits that he was one of the representatives against the idea. "Most of the people whose opinions I have respect for thought it had a smell of price-fixing, and the mechanics were not very workable," he says. But even Bradley recognized the looming crisis in prescription drug costs--and that led to a change of heart.

"There is a degree of unfairness that the people who pay the most for drugs have no access to insurance," he notes. "Two years ago I picked it up and said, 'I'm going to make this work.'"

It didn't work last year. Though Bradley introduced the bill, he later pulled it because the number of projected recipients fluctuated too much to allow anyone to tell whether the program was feasible. But this year is different, he insists. "It's every bit my intention to help to move this bill through the system," he says. Hottinger similarly hails the measure's significance and has introduced it in the Senate.

Of course this year the buzzwords around the capitol are program cuts and cost savings. But that could actually work to the advantage of the prescription rebate bill. The program would essentially cost the state and its taxpayers nothing. Although it would take about $7 million to get the plan up and running, that would be repaid within seven years, according to Bradley.

Still, there is a major point of contention between Bradley's and Hottinger's visions. While Hottinger wants the measure to help any Minnesotan without prescription drug coverage, Bradley's version would limit eligibility to those whose income is less than 250 percent of the federal poverty level. (For a single person that would mean earnings of less than $22,450; for a family of four, $46,000.)

At the moment, Hottinger says, about 16 percent of Minnesotans don't have prescription coverage, although that number will grow if more people are kicked off state-subsidized health plans because of budget cuts. But since the proposed program would not be funded by the state, Hottinger contends, there is no need to put a cap on the number of people who could qualify. "Once it's running, it doesn't matter if it's 16 percent or 26 percent," he says. Bradley, however, says he's concerned that if too many people were enrolled in the program, it would simply shift the cost to other consumers. "I'm not naive enough to think that prescription companies will let this reduce their profits," he says. "For this population, if we take a little out of pharmaceutical companies, they'll pass it on to somebody." Even if the House and Senate are able to buck the trend of the past two sessions and hammer out an agreement on the prescription rebate program, that probably wouldn't be the end of the dispute. The pharmaceutical industry hasn't sat idly by when other states have enacted similar laws. In fact, a Maine law that was a model for the legislation in Minnesota and elsewhere is currently being reviewed by the U.S. Supreme Court. That law creates the same type of discount prescription program for Maine residents, but it specifies that if a drug company doesn't provide the rebate, the state could prevent that company from selling its drugs to Maine's Medicaid recipients. At issue is whether that provision holds the state's Medicaid recipients hostage in order to benefit non-Medicaid patients, and whether the law is an attempt by a single state to regulate a nationwide industry.

Still, Hottinger insists that the proposed Minnesota program is legal. He notes that it doesn't include the controversial Medicaid provision; instead, it calls on the attorney general to investigate if drug companies fail to participate in the rebate program. The Senate majority leader is equally skeptical about concerns that the program would drive drug companies out of Minnesota or effectively freeze research. And don't even suggest to him that it should be left up to the federal government to reform prescription drug coverage.

"Legislators like me are fed up with the federal bickering about prescription drugs," he sighs. "I hope Minnesota joins with other states to push a national solution, so the federal government will respond." Only in that way, agrees the Senior Federation's Wyckoff, can we hope to arrive at policies that help not just low-income people and the uninsured, but everyone who buys prescription medications. "We need to set a trend and join the rest of the world that negotiates drug prices on behalf of its citizens," he urges. "The pharmaceutical industry will come out just fine economically."

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