Bad news for PhRMA in VT

This post is part of a series on Vermont’s single payment system law.

Marjorie Powell is PhRMA’s point person for state legislation. Vermont is one of her problem children – and not just Vermont. States in the northeast seem to love legislation that the drug industry hates.  The Maine Rx program was litigated to the Supreme Court back in 2003 (PhRMA v. Walsh), with the drug industry losing 6-3. More recently, the anti-datamining statutes in Maine, New Hampshire and Vermont triggered split decisions in the First and Second Circuits and an appeal to SCOTUS earlier this year.  Oral arguments were heard in April.

Part of the story is that the northeast is an incubator for innovative prescription drug policy, supported in no small part by the National Legislative Association on Prescription Drug Pricing (NLARx).  Their website is a cornucopia of model legislation and policy papers; what we’d expect from NCSL if it was totally free from drug company influence.  (Disclosure:  I’ve donated time to NLARx over the years).

Which brings us to Vermont’s single-payment system (GMC).  Several items in this law will keep Marjorie and her friend busy.  This not a final plan yet, but simply a framework of things drug companies don’t like:

  • Evaluate a single state-wide drug formulary – recommendation due by Jan 15, 2012.  Expect every drug-company supported patient advocacy group to testify against this.  (See the excellent Pro Publica report on PhRMA support to patient advocacy groups).  In any event, it is not clear that a single formulary would save money. Much more flexible formulary rules and aggressive generic & therapeutic substitution might. (Health Affairs ungated).
  • Dramatically expand use of 340B pricing, potentially for all drug in GMC.  I don’t know how this is possible – 340B was designed for low-income populations, not entire states.  Expanding 340B to all eligible populations is a great idea, since the prices are quite low, but making it universal will threaten access for the free clinics that were the historic base for 340B.  (I’ve written about price discrimination in prescription drug markets in US Senate testimony and the Yale Journal of Health Policy, Law & Ethics).
  • VT may request a full part D waiver, rolling all Part D drug purchasing into GMC.  This would bypass the debate on CMS “negotiating” Part D drug prices by letting the state try.
  • VT will also consider buying all GMC drugs through Medicaid, with the statutory and supplemental rebates.  I don’t know how a state could buy drugs through Medicaid for non-Medicaid populations. This also threatens to undermine the US price discrimination scheme. In any event, PhRMA can offset the rebates by raising prices.
  • A single mechanism for negotiating rebates and discounts, concentrating and leveraging the state’s buying power, creating a monopsony to negotiate with monopolies.
  • Expanding anti-datamining, gift ban, & transparency rules. Not in the legislation at present, but expect it to be added if the Supreme Court strikes down the current version of the VT anti-datamining law in Sorrell v. IMS.
  • Importation from Canada. Also missing from the list, but a perennial option frequently discussed in VT.

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