Gov. expects lawsuits
By Thomas Wilson
STAR STAFF
twilson@starhq.com
Gov. Phil Bredesen said he expects pharmaceutical
companies to sue the state over his proposed TennCare reform
plan that seeks to limit monthly drug prescriptions and amp
up generic and over-the-counter medications to limit the program's
future costs.
"The possibility of suing us is certainly there,"
Bredesen told media members during a conference call on Monday
from Washington where the governor was attending the National
Governor's Association Meeting. "I have great respect for
the pharmaceutical lobby in Washington, D.C."
Bredesen said he had already heard "sword-rattling"
by some drug companies opposing the reform plan.
Unveiled to the General Assembly last week, Bredesen's
plan seeks to adjust TennCare benefits and to establish limited
co-pays for services and pharmaceuticals. The overall strategy
is expected to generate an estimated $2.5 billion in cost-savings
over four years.
A TennCare report prepared by McKinsey &
Co. projected that TennCare, if left unchecked, will consume
virtually all new state revenue -- 91 percent of it -- in
2008. Presently, TennCare accounts for 25 percent of the state's
total budget expenditures. The McKinsey report noted that
number could rise from 34 to 40 percent by 2008 if reforms
were not made.
Pharmacy costs in TennCare are expected to exceed
$2.3 billion this year. Over the past three years, pharmaceutical
costs grew 23 percent annually, compared to 9 percent growth
in other TennCare costs. The governor's plan limits pharmaceuticals
to six prescriptions per months and 10 visits annually to
physicians as well as diagnostic tests such as x-rays and
laboratory procedures. On average, TennCare enrollees are
getting 30 prescriptions a year, compared to a national average
of 10.5, according to the McKinley report.
Bredesen wants TennCare to stop covering antihistamine
allergy medication and antacids that are available over-the-counter.
The measure could save Tennessee taxpayers up to $130 million.
In the TennCare reform plan, the state will no longer pay
$5.47 per pill of Zyprexa, which treats schizophrenia, but
instead will buy a 33-cent alternative purported to be equally
effective.
Bredesen said his administration had been informed
that the reform plan fell under existing legal parameters
by the U.S. Centers for MediCare and Medicaid Services, the
federal organization responsible for management of both health
insurance programs. "You get to invent a drug, patent it,
and then require somebody to buy it, which hardly seems like
the American way," Bredesen said.
Bredesen said several governors approached him
to talk about the TennCare reform after reading his speech
to the Legislature, including Arkansas Gov. Mike Huckabee.
He said no formal date had been set to present his reform
package to CMS officials although he expects the reform plan
to move through CMS later this spring.
The state dodged a potential regulatory bullet
when it declined to participate in a multi-state shared drug
purchase agreement. Bredesen noted that CMS officials had
overruled a shared drug purchase agreement forged by the state
governments of Michigan and Vermont last year.
In March 2003, both states authorized their pharmacy
benefits administrator, First Health Services, to simultaneously
negotiate with pharmaceutical manufacturers, using the combined
purchasing power of the pooled states' Medicaid drug programs,
to try to negotiate deeper discounts, known as supplemental
rebates. Bredesen said Tennessee strongly considered joining
a similar agreement but backed off for fear that federal regulators
would rule the plan not legally viable.
"I'm very glad we did not put a lot of our eggs
in that particular basket," he said.
Bredesen also said governors heard from President
Bush regarding the No Child Left Behind law. Billed as a method
of raising accountability and redirecting funds and control
to local school systems, the law's federal mandates have burdened
several states with failing school districts and stagnant
budgets.
Bredesen said that while federal mandates on
local systems through NCLB were considerable, "the amount
of money coming down remains considerably less" to fund the
educational reforms set forth in the law. He said Education
Secretary Rod Paige and his department officials were aware
of the concerns facing systems and students.
"They clearly realize they have their hands full
on a couple of these issues," he said.
Despite the furor over the same-sex marriage
debate, Bredesen said the issue had not incited major conversations
among fellow governors at the NGA meeting. He did say the
presence of California Gov. Arnold Schwarzenegger had set
off media frenzy at the governor's meeting. "The number of
telephoto lenses that have been brought up here is enormous,"
said Bredesen.