Case study:

How insiders scuttled
prescription drug reform

ALBANY — Even with the state facing a fiscal crisis and hard economic times, cost-saving measures opposed by powerful lobbies are rarely adopted.

One example occurred in the waning days of the most recent legislative session.

The Legislature seemed ready this year to impose controls on a taxpayer-financed prescription-drug program that even some advocates for poor people said were needed.

But closed-door negotiations fell apart at the last minute, as key advocacy groups that had received money from pharmaceutical companies pushed hard for the plan's defeat.

The fate of the plan, which Gov. George Pataki estimated would have saved the cash-strapped state $130 million, illustrates that.

For several nights early in June, about 20 people filed into a small office under a stairwell near the Senate chambers in the state Capitol.

The mission of the lawmakers, legislative staffers and Pataki aides was to perform a modest trim from the enormous $6 billion bill that New York taxpayers pay for prescription drugs for the poor through the Medicaid program.

But even if the job was urgent, the task of the group, which sometimes met until 1 a.m. in the waning days of the legislative session, seemed far from insurmountable.

The proposal, which originated with Pataki, was to limit the selection of drugs to the more than 3 million New Yorkers who get Medicaid benefits.

Thirty other states, some even more fiscally hard-pressed than the Empire State, had already enacted something similar through what's known as a "preferred-drug list.''

The theory is that several brands of drugs, especially for common ailments like arthritis, high blood pressure and acidic stomachs, are all virtually equally effective.

But if the state would require doctors to prescribe only one brand that Medicaid would pay for, it could negotiate a steep discount from the pharmaceutical company that sells the drug because the state could guarantee such a big volume of business.

"I don't see any reason why you can't do this for cholesterol or arthritis or other common illnesses where the drugs are similar,'' said Michael Burgessof the Statewide Coalition for the Aging, which supported the proposal. "You have to do cost-saving somewhere and this seemed like a good plan.''

"It's a terrific idea," said Kemp Hannon, R-Nassau County, the chairman of the Senate Health Committee. "Most private health plans already do it.''

The only apparent losers in the plan appeared to be pharmaceutical companies that would be forced to provide the discounts if they wanted to keep the state's business, cutting into their profits. In the end, they prevailed.

The deal fell apart because the Assembly didn't like the idea of having cost-saving as the chief criterion of what drugs to pick, said Richard Gottfried, D-Manhattan, the chairman of the Assembly's Health Committee.

Others said that while Pataki and the Senate were willing to go along with exempting drugs used to treat mental illness from the measure, the Assembly also wanted no limits on drugs used to treat the routine physical problems of the mentally ill — like high blood pressure and arthritis.

"The Assembly was unwilling to legislate any meaningful program," said Robert Hinckley, Pataki's top health adviser.

A key opponent was Peter Rivera, D-Bronx, the chairman of the Assembly's Health Committee.

During the spring, he issued a torrent of press releases assailing what he called "prescription-drug rationing'' that would be "a dangerous step that will adversely impact the lives of millions of New Yorkers.''

Rivera is also the chairman of the Legislature's Puerto Rican-Hispanic Task Force. Drug companies and their industry group, the Pharmaceutical Research & Manufacturers of America, have given Latino community groups hundreds of thousands of dollars in the past several years.

But Rivera said there was no connection between the donations and his opposition to the money-saving drug proposal.

"Historically, pharmaceuticals have a large interest in giving out monies to different groups – elderly, youth groups, so on and so forth," Rivera said.

"The fact they may give money to the task force is not the reason I'm for or against the PDL (preferred drug list)," he said.

Rivera pointed to his opposition to further deregulation of cable TV, which the cable industry wants, as an example of his objectivity because those companies also give money to Hispanic community groups.

The state Mental Health Association is another preferred-drug list opponent that gets support from pharmaceutical companies — about $50,000, said executive director Joseph Glazier, but is not affected by the money.

"We have a board resolution that says we will take no money intended to influence our policies,'' he said, adding that the drug-company money amounts to only about 5 percent of the agency's million-dollar annual budget.

Glazier said the group opposes the drug-list idea because it "protects pills and not patients.''

"Nationally, there has been a concern that some advocacy groups are affected by drug-company funding," Gottfried said. "Whether it's true of some groups in New York, I wouldn't want to comment."

The pharmaceutical trade group gave money to the organizations because "we like to work with our allies," said Jeff Trewhitt, a spokesman for the Pharmaceutical Research and Manufacturers of America.

He said his group opposes the preferred-drug-list idea because the decision of what medications to prescribe should be left up to doctors.

Whether the donations from pharmaceutical companies work or not, the money weakens the argument of not-for-profit groups that take it, said Blair Horner of the New York Public Interest Research Group.

"Any time you take money from corporations, it can undermine your effectiveness. That's the trade-off," he said. "You're giving your opponents a weapon."

© 2003, Gannett News Service