Regional Rx group moves for joint action

MONTPELIER, Vt. – Eight Northeastern states are forming a coalition their legislative leaders believe would have the economic power to force pharmaceutical manufacturers to lower their prices.

Legislators from the six New England states, New York and Pennsylvania plan to adopt a regional plan later this month that a consultant has told them could drive down prices as much as 40 percent.

“We have billions of dollars in potential savings outlined,” Vermont Senate President Pro Tempore Peter Shumlin said Tuesday.

Shumlin is currently chairman of the Northeast Legislative Association on Prescription Drug Prices, which is pushing the coalition.

The association announced Tuesday that it was hiring Cheryl Rivers as executive director, the group’s first permanent staff member. Rivers, who currently is chairwoman of the Vermont Senate Finance Committee, plans to resign her Senate seat to take the job.

Rivers said her first goal would be working with legislators to draft and pass legislation in each of the eight states that would enable them to form the coalition.

The coalition would have the market power to leverage deep discounts from pharmaceutical manufacturers by creating a joint purchasing pool for all public employees and people on public welfare plans. Also it would invite private employers to enroll their workers in the plan.

“Association member states have approximately 43 million residents representing more than 11 percent of the United States total population,” the group was told in an analysis commissioned from a Michigan researcher.

“The collective purchasing power of the eight states could be astounding should the association decide to pursue a coordinated pharmacy effort. The cost savings could approach 40 percent of pharmacy related expenditures,” researcher Myron D. Winkelman wrote in his report.

The association is composed of six legislators – three senators and three representatives – from each of the eight states. The group is scheduled to meet in Montpelier on Oct. 19 to ratify the idea of a coalition and begin building political support for it.

Rivers said she planned to work with each of the legislatures as the enabling legislation is drafted.

“We don’t see a lot of progress on this in Washington,” Rivers said. “I really believe this is an opportunity to work on an issue to have the states bind together and affect cost control in a very pragmatic and doable way.”

It’s unclear whether there will be the political will in each of the states to pass such a bill, but both Shumlin and Rivers were optimistic about the chances because the approach is market based and would not involve state governments setting prices.

“It’s now time for an action step,” Rivers said. “There’s always been bipartisan agreement that negotiating with companies for prescription drug prices is a market-based approach.”

Vermont, New Hampshire and Maine already have joined together and plan to launch a joint prescription purchasing pool by the end of this year.

A spokesman for Pharmaceutical Research and Manufacturers of America said it was too early to say whether cost savings were possible.

“We have not studied this proposal and we will monitor the meeting with interest,” said spokesman Jeff Trewhitt.

The Northeast is not the only region of the country that is trying such an approach.

A coalition of states from the Northwest and provinces from western Canada are trying something similar and their representatives are scheduled to meet with the Northeast association later this month.

“They have a similar organization that has exactly the same goals as I do: How do we all work together as one coalition,” Shumlin said.