State seeks to lower Medicaid costs

Thursday, Jan. 16, 2003 | 9:36 a.m.

CARSON CITY -- Nevada officials are talking with their counterparts in another state about teaming up to pressure manufacturers to lower prescription drug prices, officials said Wednesday.

All 50 states are struggling to reduce Medicaid costs. Last year Nevada's direct Medicaid bill for drugs was $79 million. It was $59 million in 2001. And those figures don't include the 60,000 patients who are covered by HMOs under Medicaid.

Chuck Duarte, administrator of state Division of Health Care Financing and Policy, said Wednesday that Nevada is talking with another state about joining together "to use market power to get increased discounts and increased drug rebates" from manufacturers. Nevada reimburses pharmacists for the ingredients and pays a fee to the pharmacist for filling the prescription.

"Rather than penalize the pharmacist, we would go after the manufacturer," he said.

Duarte declined to identify the state whose officials are talking with Nevada's. He said the talks are preliminar and no formal negotiations have been started.

He disclosed the discussions after nine northeastern states and the District of Columbia revealed they are organizing a joint nonprofit operation to manage their prescription drug program to get lower prices from the makers of drugs.

Medicaid is a federal-state program that pays for health care for the needy. More than 130,000 people in Nevada are covered. The Nevada Legislature approved a $318.8 million budget for the program for the biennium that ends June 30. But the number of recipients grew faster than expected. Improvements that had been planned for the program, such as increased payments to nursing homes, physicians and other medical personnel, had to be put on hold. So did new programs that were supposed to take effect. Because of budget shortfalls, two-thirds of the states plan on cutting Medicaid benefits, according to the National Governors Association. The association said a survey shows 16 states are reducing benefits, 15 are restricting eligibility and four are raising co-payments charged to recipients.

Gov. Kenny Guinn has not indicated there will be any reductions in Nevada benefits in his upcoming budget. Guinn is expected to outline some of his fiscal solutions during his State of the State address Monday.

Duarte said there are "lots of barriers" to overcome before any agreement is made with another state over a joint purchase program. For instance, states have long-time contracts that must be honored.

There have been suggestions that Medicaid and the health insurance program that covers state workers pool their resources in the purchase of drugs in an attempt to get a lower price. That is a possibility, said Duarte.

Forrest "Woody" Thorne, executive officer of the State Public Employees Benefit program that runs the insurance program, said there were some "preliminary talks a long time ago" about joining with Medicaid for a common purchase of drugs.

He said the insurance system was taking a wait-and-see approach to see what happens with Duarte's talks with the other state.

About 15 percent of the Nevada's bills for Medicaid are for prescription drugs. Thorne said drug prices nationally have been rising 15 to 18 percent a year. It's the fastest rising component of medical care, Thorne said.

He said some of the increases may stem from over-the-counter sales of Claritin and the availability of new generic and less expensive drugs being available.

Duarte said the $20 million increase in drug costs in the last fiscal year was caused by more expensive drugs and higher than expected enrollment.

A new computer information system that is supposed to be operative in February will be Nevada's latest effort to control Medicaid drug costs, he said.

In August 2001, the state imposed tighter controls on high-cost prescriptions, a move that is saving $300,000 a month, Duarte said. He said the focus of that effort has been on gastric acid and anti-inflammatory drugs and Viagra.

The measure aims to get Medicaid patients to use less expensive drugs that do the same jobs as the more expensive versions.

Medicaid in Nevada pays a couple of hundred thousand dollars a year for Viagra, to treat sexual dysfunction, he said. It's appropriate for the state to control the Viagra funding because it is a medication that can be abused and it is being sold on the black market, Duarte said.