Rep. Treat testifies before U.S. Trade Representative on pharmaceutical pricing policy

Treat says USTR policy recommendations could pose threat to drug prices in states, undermine national health care reform

March 3, 2010

Washington, D.C. – Maine State Rep. Sharon Treat, D-Hallowell, today testified against a report issued by the Office of the U.S. Trade Representative (USTR) that recommends a series of policies that would limit the tools used by MaineCare and other state Medicaid programs to reduce drug costs through rebates.

Rep. Treat testified on behalf of Maine’s Citizen Trade Policy Commission, which was established to assess and monitor the legal and economic impacts of trade agreements on state and local laws.

“This policy appears to be on a collision course with the administration’s domestic health care goals,” said Rep. Treat. “It will directly and negatively affect the capacity of states to provide health care and drugs to their residents through existing Medicaid and state-funded programs, and will cripple the ability of states to expand access to health care in the future.”

Maine and other states use regulatory tools and policies to control excessive pricing by medicine suppliers. The tools include programs that use the bulk purchasing and reimbursement power of governments to pressure drug companies to accept steep reductions in their reimbursement prices as a condition for gaining preferred access to a large market. One of the most important of these state mechanisms is the preferred drug lists in the Medicaid program. More than 40 states use the list for Medicaid and other programs.

The USTR office, which negotiates, oversees, and coordinates international trade policy, recommends restricting or eliminating these tools in recent trade agreements. The agreements would have the potential to impact both states and foreign governments.

The prices paid by the state of Maine for prescription drugs in its Medicaid program average around 50 percent of the average wholesale price, as a result of the federal Medicaid rebate, rebates through the state’s supplemental rebate program, and a tiered preferred drug list. Maine has been able to keep its drug spending relatively flat due to the rebates and use of the preferred drug list despite the double digit increase in spending on brand-name drug prices in the past decade.

“The Medicaid rebates used by Maine and other U.S. states have resulted in tremendous savings and has been crucial to our state during this severe economic recession,” said State Rep. Peggy Rotundo, D-Lewiston, chair of Maine’s Citizen Trade Policy Commission and long-serving member of the Appropriations and Financial Affairs Committee. “Eliminating or restricting this tool will have serious negative repercussions, compounding already declining state revenues.”

Maine’s current supplemental budget as proposed by Gov. John E. Baldacci would already cut back on pharmaceutical access programs that reduce costs for the elderly in an effort to balance the budget in light of reduced revenues due to the economy.

Contact:

Rep. Sharon Treat, 207-242-8558
Ryan MacDonald, legislative aide, 287-1430
Jodi Quintero, communications director, 287-1433