Prescription Drug Savings Bill Passes Assembly – Senate Fails to Act
Bill would reduce costs for uninsured and taxpayers

June 20, 2006

In the waning days of the Legislative Session, a bill that would help bring down drug costs for consumers and taxpayers by organizing the collective market power of New York's prescription drug consumers, EPIC and the state employee health plan was one of the major focuses of legislative attention by advocates for seniors, the uninsured and consumers, as well as the pharmaceutical industry.

The legislation, which passed overwhelmingly in the Assembly, is sponsored by Assembly Health Committee Chair Richard N. Gottfried (D, WF -Manhattan) and Senator Martin Golden (R, C – Brooklyn). The bill was supported by AARP; Center for Medical Consumers; Civil Service Employees Association (CSEA); Communication Workers of America, District 1 (CWA); Consumers Union; New York Public Interest Research Group (NYPIRG); New York State United Teachers (NYSUT); Statewide Senior Action Council; and the Working Families Party. The legislation’s primary opposition was from the Pharmaceutical Research and Manufacturer’s Association (PhRMA) and its member companies.

“Prescription drug prices are rising at an astonishing rate,” said Gottfried. “This bill provides us with an opportunity to take action that will make drugs more affordable for every New Yorker. By acting on this opportunity, we will not only lower the costs of prescription drugs, we will lower the cost of health care.

“Senator Golden and I worked hard to resolve our differences,” said Gottfried. “The advocates talked of the need for this program for months. The Senate had the opportunity to step forward and provide assistance to every New Yorker: the uninsured; seniors in the Part D “doughnut hole”; and taxpayers, who are forced to pay exorbitant prices for medications provided under Medicaid, EPIC, and through the state employees health insurance program. Instead, they listened to pharmaceutical lobbyists, who spent the last week roaming the halls and cornering every member they could find. The Senate chose to walk away, continuing to allow the pharmaceutical companies to profit at our expense.”

The bill creates a prescription drug assistance program (sometimes called “bulk purchasing”) to use the state’s bargaining leverage to win discounts (rebates) from drug companies. The plan would be open to individuals who have no prescription drug coverage or gaps in their coverage, and would include the Elderly Pharmaceutical Insurance Coverage program (EPIC), state public employee health plans and any state agencies or local governments that choose to join – representing millions of customers. If the department chooses to allow it, other states would also be able to buy-in to the program.

Drug companies that want their drugs included in the plan would be required to offer at least the same rebates they offer to Medicaid (including the higher rebates offered to be included on Medicaid’s preferred drug list).

The proposal will give Medicaid more bargaining power, and will also deliver substantial savings to individual consumers who enroll in the plan and who now pay the highest retail drug prices. It would also deliver savings to taxpayers and employees who contribute to public employee health benefits. According to a study by the Commonwealth Fund, a similar program in West Virginia has saved the state 10% on their total state pharmaceutical expenditures through their program, based on only 700,000 lives. New York’s program would start with approximately 3.8 million, with the possibility for millions more to join.

Twenty-seven states and the District of Columbia currently use some form of “bulk purchasing” to reduce prescription drug costs. None of them has as much bargaining clout the New York plan would have.

New York State Assembly
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