Maine records smallest rise in cost of drugs Use of generics helped produce savings found in national study

AUGUSTA – A new national study indicates Maine had the smallest increase in the cost of prescription drugs of any state in 2001. The cost of an average retail prescription in Maine went up 4.4 percent, less than half the national average increase of 9.7 percent last year.

“I think it shows all the steps we have taken to hold down drug prices are working,” state Human Services Commissioner Kevin Concannon said Friday. “Things like prior authorization, promoting generic drugs and paying for over-the-counter medications that work just as well as prescription drugs through Medicaid – all are part of it.”

He said doctors have found that ibuprofen, an over-the-counter medication for pain relief, is as effective for many patients as far more expensive prescription drugs such as Celebrex or Vioxx.

Concannon said the state’s controversial practice of requiring doctors under the Medicaid program to seek prior approval for the use of name brand drugs instead of their generic equivalents has also been successful. Out of 4 million prescriptions written last year, he said, there were only 35,000 requests by doctors for the use of brand name drugs.

Erin Holve, senior policy analyst with the Kaiser Foundation, which conducted the study, said: “I would think it is a combination of factors that has held down Maine’s increase in [prescription drug] prices. Maine has been very aggressive in cost-containment measures and the push to use generic drugs.”

Holve said Friday that even though the state can only directly affect the cost of drugs in the Medicaid program, those efforts may have led to a change in the way many doctors prescribe drugs for all their patients. She said a generic equivalent of a brand name drug can cost significantly less.

Though the average cost of prescription drugs in Maine didn’t increase by as much as in the past, residents are still paying more on average for each prescription than residents of other states.

While the average price of a retail prescription was $49.84 in the nation, Mainers paid $50.12 on average for each prescription. In Connecticut the average price was $52.93, and in Rhode Island it was $46.20.

Holve said one explanation for the discrepancy may be Maine’s older population and the nature of the drugs they are using. But she did not have the specific data to say that for sure.

“I wished we had a study that showed the differences in prices for the same class of drugs,” she said. “It’s clear there must be differences, given the disparities between states.”

The foundation’s analysis also showed that total spending for prescription medications rose at a slower pace in Maine than the rest of the country.

“The data is the most complete we can get,” Holve said. “The data shows that while total spending for prescription drugs grew 17.3 percent nationally, there is wide variation in spending by state – ranging from a low of 12 percent in Maine to a high of 25.2 percent in Alaska.”

She explained that the lower-priced generic drugs are keeping down the average price of prescriptions, but the higher-priced brand name drugs are still causing overall spending on prescription medications to increase faster than the average price.

Mainers on a per capita basis are buying slightly fewer prescriptions, 10.8 per year, than the national average of 10.9. But that still translates into a lot of money – nearly $698 million was spent in 2001 for retail prescriptions.

The drug price study was done by the Henry J. Kaiser Family Foundation, an independent philanthropy that focuses on health care issues. The data for the study came from Verispan Scott-Levin Prescription Audit, a firm that collects prescription data from 37,000 retail pharmacies across the country.

Concannon said he was aware that people in different states are paying different prices for the same drug. He said the drug industry is making “about a 20 percent profit” overall on the sale of prescription medications, but because the pricing policies are not “transparent” it is very difficult to determine why the price differs from state to state for the same drug.

Rep. Joesph Bruno, R-Raymond, said Concannon is leaving out a major reason for the small overall increase in drug prices. Bruno’s company owns 13 pharmacies from Saco to Fort Kent. He said pharmacies are being squeezed by reimbursement rates set by the state.

“We have not had an increase in the dispensing fee since 1982,” he said. “When Commissioner Concannon talks about these big profit margins, he’s not talking about retail pharmacies. He’s talking about the manufacturers. We’re looking at 1 percent, not 20.”

Bruno said many small and independent pharmacies may be forced out of business by the latest budget cuts. Part of the budget cuts Gov. Angus King ordered last week will reduce drug reimbursement rates.

“Drug prices have been held down because of pharmacists not getting what they should,” Bruno said. “And now [the state is] going to cut further. I have warned [officials] this could push some people out of business.”

When asked if he would be closing stores, Bruno said that could happen. He said his company’s immediate response would be to stop all expansion of facilities, services or renovations that had been planned.

“This is serious,” he said. “I am still figuring out how bad it’s going to get.”

Concannon said Bruno was “over-reacting” and he denied that pharmacies are facing hard times because of state policies.

“I’ve never seen a poor pharmacist,” he said. “I can understand Representative Bruno’s frustration, but he is wrong on this. We are not going to put anybody out of business.”