Massachusetts assaults prices

February 1, 2000

Pharmaceutical Representative

A last-minute provision, passed with budget legislation, may give Massachusetts a state-run bulk pharmaceutical purchasing program.

A last-minute provision, passed with budget legislation, may give Massachusetts a state-run bulk pharmaceutical purchasing program. If implemented, the state-sponsored program would be run by a third party and would negotiate discounts with pharmaceutical companies for underinsured members of the state's 1.5 million citizens.

Pharmaceutical companies have reacted harshly to the program, which they say is vague and ill-conceived. "[The Massachusetts state government is] going to set up a government-controlled, bulk-purchasing program for the Commonwealth of Massachusetts for 'all the underinsured folks in the state.' Well, what does that mean?" asked Jeff Trewhitt, spokesman for the Washington-based Pharmaceutical Research and Manufacturers of America. "Are they talking about half the state, a fourth [of] the state, or what? There is no precise definition there."

According to PhRMA, the state's Medicaid and senior pharmacy programs are already in place to serve the senior population. By taking seniors out of those established programs and enrolling them in the new program, Massachusetts would sacrifice $73 million worth of rebates through Medicaid and $2 million in rebates through the senior pharmacy program.

Despite the fact that it would be run by a third party - most likely former Rep. Joseph Kennedy's not-for-profit company, Citizens Energy Corp. - the government-controlled aspect of the program is what has PhRMA worried the most. "If you look at bulk purchasing programs in other industries, you see a tendency to put price controls into place," said Trewhitt. "There is that strong potential here because this is going to be a state-run program. And [whenever] any government entity gets into a program where, all of a sudden, the cost is greater than expected, the inclination is to slap on price controls or engage in rationing. Neither option is very attractive." PR

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