The pharmaceutical industry bid to block Vermont from offering cut-rate prescriptions to a broader range of people through Medicaid has taken the form of a law suit against the federal government.
The state of Vermont is scheduled to begin signing people up for a new program on 01 January 2001 that will allow deep discounts to Vermont's poorest citizens. However, the pharmaceutical industry has asked a federal judge in Washington, DC, to suspend the program while the lawsuit is pending.
Pharmaceutical Research and Manufacturers of America, a trade group representing the industry, has opposed the program ever since it was conceived by Howard Dean, Vermont's governor.
So, PhRMA has taken the same arguments it made to U.S. Health and Human Services Secretary Donna Shalala's staff to U.S. District Court.
"The cost and financing of prescription drugs for lower income individuals is an issue of national importance and has been the subject of extensive debate in the legislative and executive branches of the federal government and many state governments," PhRMA's lawsuit says.
Vermont's program relies on Medicaid, the federal-state health insurance program for the poor, to help reduce prescription drug prices for thousands of people who otherwise wouldn't qualify for Medicaid coverage.
Altogether, that would amount to a discount of an average of 30 percent. The actual discount would be more or less, depending on the particular drug that someone has to take.
Some of those provisions were ones that drew the industry's objections.
"One of the provisions in the Medicaid law says that Medicaid beneficiaries can be charged no more than nominal co-payments for their medical services," said Marjorie Powell, PhRMA's assistant general counsel. "Under the waiver as approved ... these new Medicaid beneficiaries would be paying 82.5 percent of the cost of their drugs. That's clearly more than a nominal co-payment."
Vermont is the only state that has won federal approval for such a plan, but other states are interested because it would transfer discounts for which they qualify to a broader segment of their populations. New Hampshire, for example, already has applied for approval of an identical program.
Vermont Human Services Secretary Jane Kitchel said she had not been informed of the lawsuit, but she said she was not surprised that the industry would seek to block what would be a small program in a small state.
"It's not because the numbers are large in Vermont,'' she said. ``It's the precedent here."
Mary Kahn, a spokeswoman with the federal agency, said she would not comment because her department had not been notified of the lawsuit.