Governor’s New Medicaid Supplemental Drug Rebate Pool

Governor Baldacci visited seniors and disabled citizens to reassure them that the state will continue to pay to offset Medicare Part D faults.

by Ramona du Houx

What was billed as way to help America’s senior citizens obtain their prescription drugs at lower rates has turned into an administrative nightmare that continues to benefit the drug companies more than our senior citizens.

"I cannot allow seniors to not get the medicines they need. A person who does not get a life-sustaining drug could end up hospitalized or even die. I can’t let that happen," said the governor. "I won’t let that happen." And he has been true to his word.

The ills that have plagued America since the federal government announced its new program, Medicare Part D, started back in November ’05; that’s when Governor Baldacci starting making plans and announced a help line to assist seniors.

With Medicare Part D, Maine is outlawed from continuing Medicaid coverage for people who are dually eligible for Medicaid and Medicare.

Maine was the first state in the country to create a safety net for Part D recipients. This ensured that Maine’s seniors would continue to get the drugs they need while complications were fixed at the federal level.

In addition, the state is continuing to help Maine’s lowest-income seniors afford the costs of the Part D benefit. "We are helping with premiums, deductibles, co-pays, and the ‘doughnut hole’ — the point at which Part D does not cover any drug costs until a recipient’s out-of-pocket costs exceed a certain amount, often occurring between $1,200 and $2,500," said Jude Walsh of the Governor’s Office of Health Policy and Finance. The state is covering 80 percent of the costs recipients incur while in the doughnut hole.

Not satisfied with the federal government’s response to prescription drug costs the governor took action. Over the summer Baldacci announced his innovative first-ever, state-led supplemental drug rebate pool through Medicaid.

The drug-buying collaborative, known as the Sovereign States Drug Consortium, started purchasing drugs last November and has already saved Maine’s Medicaid program more than $1 million and is expected to save $5 million once the program is fully operational. Iowa, Maine, and Vermont make up the SSDC.

The Baldacci administration has been involved in discussions with seven other states that may be interested in joining the consortium.

Walsh said the consortium allows the three states to negotiate directly with 58 drug manufacturers for more than 1,300 medications. It also limits the role of drug purchasing organizations, called "pharmacy benefit managers," in order to make sure the states get all of the negotiated savings.

The federal Center for Medicare and Medicaid Services is allowing the drug negotiation arrangement, even though the legislation that created the Medicare Part D program specifically bars the federal government from entering into such negotiations.

Iowa Governor Tom Vilsack joined Gov. John Baldacci to express his gratitude for leading the way with the consortium and with Dirigo Health.

"This particular program has saved my state $11 million," said Vilsack, "So I’m here to thank John." Vilsack said the pool is particularly advantageous to smaller states that lack extensive purchasing power. Praising Baldacci as a national leader among governors on health-care-related issues, Vilsack said he modeled a program in his state that has expanded coverage to 15,000, uninsured residents after Dirigo.

Dirigo Health has provides coverage for more than 16,200 people and more than 2,300 businesses since it started in 2005. Over the past two years, more than $78 million of savings to the Maine health-care system have been directly attributed to Dirigo.

Recently Baldacci announced that the federal government has certified DirigoChoice as an insurance product for purposes of federal Health Coverage Tax Credits (HCTC). The HCTC program is open to qualified employees who were laid off from their manufacturing jobs due to foreign trade and are eligible to receive trade readjustment assistance.

"The federal government’s certification of DirigoChoice will increase access to affordable health insurance for those in Maine who have been laid off through no fault of their own," said Governor Baldacci. "I am pleased that DirigoChoice is now a certified HCTC program."

Dirigo Health is moving forward with the blue ribbon commission appointed by the governor. And affordable drug coverage is also moving in the right direction with the governor’s new innovative SSDC.

"Unlike the Medicare Drug Benefit, states have control over what we cover under Medicaid and how much we pay for it. The preservation of the benefit we provide our citizens is a top priority. We must control spending to be able to afford that coverage," stated a letter issued by the SSDC.

"We can’t go it alone; we are a small state with 1.3 million people; we need to work together to pool our resources," said the governor. "In a Medicaid drug rebate pool, states leverage their collective covered lives to negotiate for discounts in drug costs. We are stronger working together."