Prescription Drug Prices

In todays Miami Herald State Representative Juan C. Zapata calls for a mandated use of generic drugs for Medicaid and other state-funded programs http://www.miamiherald.com/2010/10/03/1854185/mandate-use-of-generic-drugs-for.html . He is correct saying that the use of generic drugs will slow down the predicted explosive growth of Medicaid expenditures but the mandated use of generic drugs addresses only ONE aspect of the problem. According to a New York Times article , Drug Makers Accused of Ignoring Price Law,” http://www.nytimes.com/2010/10/03/us/03drug.html , drug manufacturers consistently defy complying with a federal law that requires them to provide the government with pricing data needed to calculate discounts on medications prescribed for Medicaid recipients. More than three-fourths of drug manufacturers did not fully comply with the law requiring them to provide price data. They are supposed to file monthly and quarterly reports on what wholesalers paid them for drugs eventually sold to retail pharmacies. Without price data, the federal government cannot compute rebates, and states may be unable to collect them. As a condition of having their drugs covered by Medicaid, pharmaceutical companies must agree to provide discounts in the form of rebates. Drug companies pay the rebates to state Medicaid programs. The federal government and the states share the cost of Medicaid — roughly $400 billion in the last year — and share the savings that result from the rebates. Under the health care law, the minimum rebate on brand-name drugs dispensed to Medicaid recipients was increased to 23.1 percent of the average manufacturer price, from 15.1 percent. The minimum rebate on generic drugs was increased to 13 percent, from 11 percent. The Congressional Budget Office estimates that the changes could save the federal government more than $35 billion over 10 years. Major drug companies are already reporting adverse effects on their revenues. However, drug companies stand to gain many customers with the scheduled Medicaid expansion in 2014. What can be done to address this problem? Under federal law, the government can impose penalties of $10,000 a day on a drug manufacturer that fails to provide the information “on a timely basis. According to the Inspector General at the Department of Health and Human Services the federal government has had this authority since 1990 but has not used it! Why not? We must control and limit the rising healthcare costs and drug manufactures must understand that they can be either be part of the problem, or part of the solution. We also should lift the limitation on prescription drug re-importation and stop the unscrupulous use of antipsychotic drugs, which generate over $14 billion in revenue for drug manufacturers. Otherwise, we have no choice but to resort to rationing of healthcare services and prescription drugs.

Yours
Bernd