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The Honolulu Advertiser
Posted on: Friday, April 23, 2004

Hawai'i ready to join prescription drug pool

By Dan Nakaso
Advertiser Staff Writer

State officials, hoping to save $9 million per year in Medicaid prescription drug costs, within the next two weeks will begin the process to join the country's first consortium of states to combine their drug-buying clout.

Hawai'i's upcoming application to the federal Centers for Medicare and Medicaid Services follows yesterday's move by Health and Human Services Secretary Tommy Thompson to approve the multistate purchasing pool plan by Michigan, Vermont, New Hampshire, Alaska and Nevada.

Together, the pharmaceutical buying power of the five states is estimated to be worth $1 billion.

"By using the proven technique of negotiating lower prices, states will reap important savings on their drug costs," Thompson said in a statement. "The ability to purchase drugs at a lower cost will help states continue to provide critical medications to the millions of low-income citizens who depend on the Medicaid program."

Now Hawai'i officials — along with representatives from three additional states — can mimic the applications that were approved yesterday, said Lillian Koller, director of the state Department of Human Services.

If approved, all nine states could begin buying prescriptions drugs together by September, Koller said.

Hawai'i spends about $100 million annually on prescription drugs for 37,500 low-income, blind, disabled and elderly Medicaid patients, who receive their prescriptions for free.

The costs have increased by about 20 percent for each of the past several years.

State officials estimate they would save $9 million a year on lower-priced drugs and through rebates provided by pharmaceutical companies that want to be on Hawai'i's "preferred list," Koller said.

"What we want in this state is to improve people's access to affordable, quality healthcare," Koller said. "The way to have quality healthcare is to be able to save some money so that we can afford to give a rich package of healthcare benefits to people."

Gov. Linda Lingle yesterday praised the purchasing pool program and said she had anticipated the federal government would approve it.

"What it does for a small state like us is give us the added ability to negotiate lower costs for prescription drugs that we fund for our Medicaid program," Lingle said.

The five states that won approval yesterday have signed agreements with First Health Services Corp., a pharmaceutical benefit manager, to negotiate lower prices, Health and Human Services officials said. Each state will maintain its own list of preferred drugs and exercise clinical oversight of their lists, officials said.

In addition to the 37,500 drug recipients, Koller said Hawai'i has another 147,000 Medicaid patients who are ineligible for the potential drug discounts because they are covered by three private health plans — HMSA, Kaiser Permanente and Aloha Care.

Hawai'i officials may try to regain control over the 147,000 patients' prescription drug plans when the contracts with the private health providers expire in July 2005, Koller said.

The additional Medicaid clients would add to the consortium's buying power, Koller said, and also generate additional revenue though rebates from pharmaceutical companies.

Greg Marchildon, AARP Hawai'i state director, worried yesterday that state officials from Lingle down had announced the upcoming approval on Monday without actually making their own application to join the pool.

"For this Medicaid pool and potentially for more people, this could be a huge step forward in being able to negotiate really meaningful discounts and rebates," Marchil-don said. "To find out today that isn't happening for Hawai'i is a little bit disappointing. It's clearly not a done deal. In fact nothing's been done at all. ... I think the governor and Lillian Koller's instincts are absolutely right here. But we can't just want to be in the pool. We have to go through the process that will actually get us in the pool."

Bob Ogawa, president of the Hawaii Long Term Care Association, said "whether something like this is effective or not still remains to be seen. This is the first of its kind ... so I assume that there are going to be a lot of details to be worked out."

Advertiser Staff Writer Lynda Arakawa contributed to this report. Reach Dan Nakaso at dnakaso@honoluluadvertiser.com or 525-8085.