(5/04/01) The health and welfare committee spent weeks working on a bill designed to lower prescription drug prices in Vermont. The bill passed the house and had good support but in the course of the debate, the true financial health of Vermont’s Medicaid was exposed.

The appropriations committee presented recent financial numbers from the administration that showed the Medicaid deficit would grow from $1.5M to $75M in the next six years. Medicaid traditionally pays health care costs for the poor but Vermont has expanded these programs to allow children of middle class families and more elderly to become eligible. Medicaid costs amounted to 9% of the state’s total budget in 1990 but increased costs will eat up 19% of the budget next year. House members and the public now recognize the current level of Medicaid is unwarranted and un-affordable and we have to do more to balance our needs with financial resources.

H.31 passed this year and it called for promoting greater use of inexpensive drugs by offering health care providers more education and training on what the alternatives are to brand names. This will counter the TV commercials glorifying particular drugs and provide alternatives for a fraction of the cost of brand names.

The bill would also create a formulary, which would amount to a list of preferred drugs for each of a variety of ailments. It will be under state jurisdiction and the house allocated $210,000 of state money to set this up. The goal behind the formulary is to ensure greater sales to the manufacturer of those chosen prescriptions, which in turn would presumably result in volume discounts.

The total savings from the formulary, which is estimated to be between $2 to $8 million a year, will be shared between the state and federal government. However, if these savings do materialize, some of the money would go to a new catastrophic drug coverage program for Vermonters.

This new program will work as follows. For a family of two with an income of $20,000 pharmaceutical expenses in excess of $1,600, or 8% of a person’s income, would be paid for by the state. The program extends coverage for families with income up to $100,000 but they would have to absorb the first $20,000 of expenses before any state reimbursement. The cost to the state would be capped to the amount appropriated or about $2 million starting in FY03.

Another provision of the bill supported by the house health and welfare committee restored a pharmacy payment cut made last year when the discount was increased from 10% to 11.9% for Medicaid prescriptions. Though the appropriations wanted to increase the dispensing fee to make up some of this difference, the house preferred to increase the pharmacy payment which will cost the state $852,000.

The debate on this issue was very emotional. We were told pharmacies were closing around the state and this discount reimbursement could make a big difference to local establishments. However, all medical providers are experiencing Medicaid underpayments and pharmacies are not unique. It was stressed that a partial remedy would be more affordable to the state and that underpayment to all providers had to be addressed.

Another provision in the house bill would assist in establishing more “federally qualified health centers” similar to what was proposed last year. Physicians practicing there qualify patients for the lowest drug prices charged to people in federal health plans, like Medicare, or even Veteran Affairs health plans. We were told these prices are the lowest offered. The amount of state monies appropriated to set this up is $160,000.

Because pharmaceutical costs are such a high burden I received many calls on this bill. I think some form of drug relief will pass the senate but in the meantime Vermont has programs available now to help the elderly who are burdened with high drug costs.

• VHAP Pharmacy: Covers drugs, eyeglasses, and related services with up to $2 co-payment for drugs for people under 150% of the federal poverty level ($1,407/month for two) who are elderly, disabled and have no insurance for drugs.

 
• Vscript: Covers maintenance drugs with $2 co-pay for people under 175% federal poverty level, 50% co-pay for people 175-225% over poverty level ($2,110/month for two) for elderly and disabled.

Thank you for your calls and notes. I can be reached at 658-3975 (home), 228-2228 (State House) and via e-mail

Rep. Frank Mazur
South Burlington