Federal and state taxpayers could save tens of millions of dollars annually if drug prices were consistent throughout the Medicaid health insurance program for the poor, according to a government watchdog report.
Medicaid, which is jointly funded by the federal government and each state where it operates, pays a wide range of prices for the same drug, according to an analysis of 28 drugs by the U.S. Department of Health and Human Services’ Office of Inspector General.
In 2001, the year from which data were analyzed, Medicaid could have saved more than $86 million. In Illinois, the Medicaid program could have saved nearly $5 million in 2001 on more than $1 billion in spending, according to the analysis.
“The highest paying state’s unit reimbursement price ranged from 12 to 4,073 percent more per drug than the lowest paying state for the 28 drugs,” the report said. “Medicaid could have saved $86.7 million in fiscal 2001 if all states had reimbursed at the same price as the lowest paying state for each of the 28 drugs.”
Although the savings is a fraction of the more than $20 billion Medicaid spends each year on drugs, authors of the report were concerned about the rapid rise in pharmaceutical costs.
“From 1997 to 2001, federal Medicaid expenditures for prescription drugs grew at more than twice the rate of total Medicaid spending,” the report said.
To remedy this problem and potentially rein in drug costs, the inspector general’s report encouraged the federal Medicaid administrator, the Centers for Medicare & Medicaid Services, to “share more accurate drug pricing information with states,” among other recommendations.
For their part, officials from the Centers for Medicare & Medicaid Services said they couldn’t vouch for the accuracy of the data but said they plan to work for more accurate pricing and conduct research on factors that affect states’ drug prices.
Meanwhile, the Illinois Department of Public Aid, which administers the Medicaid program here, said it “would be very interested in exploring any proposals to reduce drug costs” as part of Gov. Rod Blagojevich administration’s focus on reducing the state’s budget for prescriptions, said public aid spokesman Mike Claffey.
“Since the Blagojevich administration took office in 2003, we have been extremely aggressive at containing drug costs and have been very aggressive in negotiating rebates with drugmakers and in encouraging more patients to use generic drugs through our preferred drug lists,” Claffey added.
Transplant drug OK’d: Morton Grove Pharmaceuticals Inc. has won approval from the U.S. Food and Drug Administration to market a widely used drug to help prevent patients from rejecting their organs after transplant surgery.
The small Morton Grove-based developer of generic drugs could add up to $30 million in annual sales with the U.S. approval of cyclosporine oral solution.
The brand name version of the anti-organ-rejection drug is Sandimmune Oral Solution, sold by Swiss drug giant Novartis AG.
“We are hoping to take 50 percent of the market in the first year,” said Morton Grove Chairman and Chief Executive Brian Tambi. “The company is well into drug categories that are the strongholds of major companies.”
With the new product, Tambi says Morton Grove is projecting annual sales to increase more than 30 percent, to $130 million. The privately held company is owned by Tambi and Chicago-based investment firm GTCR Golder Rauner.