Leading Drug Firm to Cut Price on Products Sold to Medicaid

Bowing to growing political pressure, the world’s biggest pharmaceutical manufacturer said Friday that it would discount the price of drugs it sells to Medicaid programs for the poor.

The plan by Merck & Co., if widely accepted, would save the federal-state programs more than $20 million annually.

Anthony Fiskett, a spokesman for Rahway, N.J.-based Merck, called the plan an attempt to respond to the needs of poor patients, doctors and the states. He conceded, however, that it also was a response to a bill being prepared by Sen. David Pryor (D-Ark.) that would require drug companies to bid for Medicaid business.

California legislators, meanwhile, are considering whether to require all drug companies to offer discounts such as those Merck now proposes.

Under the plan, states would get rebates based on Merck’s lowest prices, matching what the company already offers the Veterans Affairs Department and some other big customers. But the plan also could boost Merck’s business because it calls for the states, as their part of the deal, to lift restrictions that have made it difficult or impossible for doctors in some states to prescribe expensive drugs for Medicaid patients.

Fiskett said Medicaid business accounts for 8% to 10% of Merck’s roughly $3 billion in U.S. sales annually. It offers discounts of 7% to 12% for big customers.

The plan was presented to congressional committee aides on Thursday, and copies of the proposal were sent to officials in all 50 states. Reaction was mixed, with some officials expressing concern that Merck’s discounts were too small and that lifting restrictions would increase the cost of state Medicaid programs.

Merck’s top-selling products include Vasotec, a blood-pressure and heart drug; Mevacor, which reduces cholesterol, and Pepcid, an ulcer treatment.