GOVERNOR
DOUGLAS ANNOUNCES VERMONT TO FORM FIRST-EVER
STATE ADMINISTERED
PRESCRIPTION DRUG
PURCHASING
POOL WITH MAINE AND IOWA
Program Expected to Save Vermont $4 Million This Year
Montpelier, Vt. – Governor Jim Douglas announced today that
Vermont, Iowa and Maine have formed a first in the nation, state administered
prescription drug purchasing pool, that is expected to save Vermont approximately
$4 million this year. On July
20, 2006 the Centers for Medicare and Medicaid Services approved
the operation of the Sovereign States Drug Consortium (SSDC), collaboration
between Vermont, Maine
and Iowa.
Governor Douglas stated, “Medicaid drug costs
have grown dramatically in recent years. States have control over what we cover
under Medicaid and how much we pay for it. Medicaid programs have been
innovative in creating cost-saving strategies like Preferred Drug Lists and
appropriate drug utilization programs. The preservation of the benefit we
provide our citizens is a top priority; however, we must work to control
spending in order to ensure coverage. In the absence of federal initiatives, it
has been necessary for states to be creative in finding ways to contain costs. The
creation of the SSDC is the next step in the ongoing effort to control the
increases in drug costs while maintaining a comprehensive drug benefit.”
In a Medicaid drug rebate pool, states leverage their collective
covered lives to negotiate for discounts in drug costs. States
use Preferred Drug Lists to promote clinically appropriate alternatives that
are the most cost effective in the individual states. Preferred products may
be generics, low cost brands, or higher cost brands where the drug
manufacturers provide a financial incentive to have their products preferred.
The incentive is provided through a negotiated rebate from the drug
manufacturers based on actual utilization. The more states in a pool, the higher
the utilization, and, thus, the greater the rebate negotiated.
Two other Medicaid pools have been approved by CMS. These pools are
managed by pharmacy benefit management companies contracted to select states. One
of the unique components of the SSDC as a state administered pool is that any
state can participate regardless of how they administer their Medicaid pharmacy
benefit, through state or contractual resources, and the SSDC will be
encouraging other states to look at this model in the future. Another
distinction is that the SSDC process is completely transparent to its members.
All participating states have access to the full terms and conditions of all
bids by pharmaceutical manufacturers. States then collectively review the bids
while independently deciding which are appropriate for each of our states. At
the same, this arrangement can assure that 100 percent of negotiated rebates
are returned to the Medicaid program – a no contractor can profit by
sharing in the rebates.
While Vermont
anticipates $4 million in returns this year on its 121,000 Medicaid
beneficiaries, Iowa expects $11 million and Maine nearly $5 million
on their collective lives. Governor Douglas noted, “This represents and
extraordinary accomplishment for our states of which we can be very
proud.”
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Jason Gibbs
Governor’s
Communications Director
109
State Street ¨ The Pavilion ¨ Montpelier,
VT 05609-0101 ¨ www.vermont.gov/governor
Telephone: 802.828.3333 ¨ Fax: 802.828.3339 ¨ TDD: 802.828.3345