The Pharmaceutical Research and Manufacturers of America, Washington, has challenged Medicaid programs' imposition of strict controls, such as formularies and prior authorization, over select high-priced prescription drugs.
In a lawsuit filed Friday in U.S. District Court in Washington, PhRMA seeks specifically to nullify Michigan's new Pharmaceutical Best Practices Initiative and asks for a court order prohibiting HHS from approving similar efforts. PhRMA also requested an order terminating other state initiatives "that contain any or all of the illegal features" of the Michigan program. The trade group announced its suit yesterday.
The Michigan program, approved by HHS in January and implemented in March, established a restricted Medicaid formulary. To get nonpreferred products on the list, manufacturers must pay Michigan additional rebates. Physicians, meanwhile, must seek pre-authorization to prescribe drugs not on the list.
At least 12 states have authorized or announced plans for similar measures that restrict use of certain high-priced prescription drugs. Nationwide Medicaid programs' pharmaceutical spending has been growing rapidly, reaching a total of $20 billion in 2001.
PhRMA said most physicians don't take the time to seek prior approval. "It is for this reason that drugs subject to prior authorization suffer precipitous declines in usage," the trade organization contended.
In its 27-page complaint, PhRMA alleged that HHS Secretary Tommy Thompson and Centers for Medicare and Medicaid Services Administrator Thomas Scully overstepped their authority in approving the Michigan program.
The program violates Medicaid law under the Social Security Act by excluding certain drugs for financial rather than clinical reasons, PhRMA said. In addition, PhRMA charged that the Michigan program jeopardizes Medicaid benefits to obtain discounts for non-Medicaid individuals, another violation of Medicaid law.
HHS spokesman Bill Pierce said officials are disappointed by the lawsuit. "We believe the secretary has the authority to approve these state plan amendments," Pierce said. "The secretary believes these programs help expand access to more people who might otherwise not get it and saves money not only for the states, but for beneficiaries as well."
PhRMA sympathizes with states' budgetary problems and has offered to pay for consultants to advise states on ways to reduce Medicaid drug spending, said Bruce Lott, the group's director of state media relations.
Disease management and better fraud and abuse control could reduce Medicaid spending and improve beneficiaries' health, Lott said. At issue in the lawsuit is whether HHS and the CMS can approve Medicaid plan amendments "that include these types of policies we contend are illegal," he said.