States Eye Canada, Group Buys To Control Surging Drug Prices The prescription drug bill that passed Congress last year didn't include one thing many activists wanted: price controls. But states may soon go where the federal government feared to tread.  States are looking at several ways to force down prescription drug prices. Some are trying to purchase drugs directly from Canada, in effect importing that nation's price controls.   There are also several multistate groups that exist to leverage states' drug purchasing power. These states would band together to "maximize their marketing clout," as one activist put it.  While these efforts fall short of actual price controls, they signify a growing trend in that direction. If drug costs continue to rise, many analysts expect that Washington lawmakers will begin looking at the idea.  "You can fully expect to see a debate on Medicare price controls in the near future," said Merrill Matthews, director of the Council for Affordable Health Insurance. "I don't think there is any doubt about that."  States Cry Poverty  State leaders say rising drug costs are forcing their hand.  "States across the country are in similar positions, faced with rising health care bills and dwindling resources," said Gov. Rod Blagojevich, D-Ill., last month. Buying drugs from Canada has gotten the most attention. Canada's drugs are about 40% cheaper on average because it imposes price controls.  Federal health officials have repeatedly refused to allow sales of Canadian drugs in the U.S., citing safety concerns over counterfeit drugs.  But Illinois, New Hampshire, Iowa, Wisconsin and Minnesota have all pushed to allow the sales. Boston and Springfield, Mass., are moving ahead with plans to buy Canadian drugs for city employees. This would let them use Canada's price controls to lower U.S. drug costs.  Some major drug makers have warned they may restrict supply to Canada if stores there start selling in bulk to the U.S.  States Make Joint Drug Buys. Another effort involves the creation of multistate groups to push for lower drug prices. These groups seek to use the states' combined purchasing power to force drug makers to sell to at lower prices. This is sometimes called "bulk price purchasing."  One such group is the Multi-State Drug Purchasing Pact. It includes Delaware, New Mexico and West Virginia. "The goal . . . is to lower the cost of prescription drugs through a combined market power," said West Virginia Gov. Bob Wise last year.  Another such group is the National Legislative Association on Prescription Drug Prices, which includes the New England states, New York, Pennsylvania, Hawaii and Washington, D.C. On its Web site, NLAPDP says it exists, in part, to "encourage and support the enactment of legislation to reduce prescription drug prices." It also pushes bulk purchasing.  "We encourage states to get together to maximize their marketing clout," said Cheryl Rivers, NLAPDP's executive director.  Rivers said that although the states would operate "in concert" from a common plan, each state would still negotiate its drug buys individually. This would bypass any need for federal approval of a multistate compact, she says.  "It depends on how you structure the negotiations," she said. Experts say this type of activity is common. Groups often get together to negotiate for lower prices. But if a group becomes large enough, it becomes a monopsony — a single buyer who can dictate the price.  "That is the flip side of a monopoly. Both have the same kinds of problems," Matthews said. "If you have a single buyer out there, then companies have to cater to the buyer."  Indeed, the multistate groups are encouraging other states to join to increase their leverage. Richard Cauchi, health policy expert for the National Conference of State Legislatures, says the state groups are focused on lowering Medicaid prices. That may change, though.  "Nobody has combined Medicaid with non-Medicaid drug purchasing at this point (but) that was one of the goals early on," he said.  Whether Canadian drug reimportation or multistate compacts catch on in states is uncertain at this point. Many groups are still pouring over the Medicare drug bill's provisions. Answers may come this spring. Illinois' Blagojevich will host a governors' summit on Canadian drugs in Washington, D.C., in February. NLAPDP also plans a spring meeting, although no date has been set.  In either case, a state-level push for lower drug prices could prompt Washington lawmakers to revisit the issue soon. A key Democratic criticism of the prescription drug bill was its lack of any mechanism to control drug prices. This story originally came from Investor's Business Daily ... Return to the Media Section

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