Frugal Drug Plan by 3 Yankee States

In the country’s first multistate effort to reduce prescription drug prices for consumers, three New England states have banded together to launch a joint prescription buying plan.

“It just makes sense,” Vermont Gov. Howard Dean said in an interview Friday. “Pharmacy costs have been spiraling out of control for years, punching holes in every state Medicaid budget.”

Under the program, Vermont, New Hampshire and Maine will pool the funds they receive for Medicaid--the federal insurance plan for the poor and disabled. About 330,000 people in the three states are covered by Medicaid.

Dean, a physician, said the plan is based on a private-sector model, using combined buying power to purchase prescription drugs in volume at reduced costs. The three states spend a total of $387 million on prescription drugs for Medicaid programs and expect to save 10% to 15% annually through the tri-state buying plan.

By pooling their efforts, the states also expect to reduce administrative costs for Medicaid funds.

At a news conference Thursday in Concord, N.H., Gov. Jeanne Shaheen credited “Yankee ingenuity” with devising the agreement.

“The high cost of prescription drugs is a national problem, and it calls out for a national solution,” said Shaheen, a Democrat. “But until Congress and the president take action, we are going to have to keep working on it in New Hampshire.”

The buying plan, scheduled to take effect Nov. 1, is the result of more than a year of work by the three states, where some residents have taken to traveling to Canada to buy cheaper prescription drugs.

Dean, a Democrat, said Vermont and Maine have been “on the cutting edge” of attempts to bring down prescription costs for poor, disabled and elderly citizens. Dean sought and received a waiver from the Clinton administration that raised the minimum annual eligibility for federally subsidized health care and prescription coverage.

As a result, he said, 94% of Vermont residents older than 18 receive some subsidy, including “nearly all our children--it’s certainly the highest number in the country for children.”

Maine last year introduced the Maine RX law, allowing the state to negotiate directly with drug companies for about 325,000 state residents who have no insurance for prescription drugs.

Maine Gov. Angus King, an independent, was out of state when the joint buying plan was announced. Through a spokesman, he said: “Once again, New England is leading the national charge.”

The buying plan will be administered by First Health Services Corp. of Virginia. Dean said the method is “exactly the same as any group of hospitals or doctors’ offices would use.”

Vermont’s governor said he expects the joint-purchasing plan to serve as a model for other states. “It’s completely replicable,” he said.