Louisiana Seeks Federal OK to Join Medicaid Pharmaceutical Purchasing Pool

The Louisiana Department of Health announced today it has filed a request with the federal Centers of Medicare and Medicaid Services to participate in a multi-state Medicaid drug purchasing pool.

The purchasing pool is known as The Optimal Preferred drug list Solution. In the pool, Louisiana joins Maryland and West Virginia to use their joint purchasing power to acquire prescription drugs for their Medicaid populations at lower costs. Earlier this year, CMS approved a similar plan for a seven-state purchasing pool that includes Michigan, Vermont, New Hampshire, Alaska, Nevada, Minnesota and Hawaii. CMS has up to 90 days to approve or reject DHH’s request.

Dr. Fred Cerise, secretary of the Department of Health and Hospitals, said participating in a drug purchasing pool will allow LDH to save between $8 million and $10 million per year. This is in addition to the $29 million dollars in supplemental rebates that LDH received in fiscal year 2004.

“In spite of past cost controls, limits on some medications that Medicaid pays for and manufacturer rebate programs, prescription drug spending still represents the largest single item in the Medicaid budget. Therefore, as part of our efforts to reform health care through more efficient use of taxpayer dollars, we will continue to aggressively pursue this and other ways to slow or reduce spending,” Cerise said.

The application to CMS to approve this plan comes following an announcement earlier this week that LDH is considering reducing from six to one, the number of Viagra-like pills that Medicaid pays for each month.

The three-state purchasing pool will be administered by Provider Synergies, Louisiana’s current contractor for its preferred drug list program. By combining the drug utilization rates for certain medications in the Medicaid programs of three states, Provider Synergies will seek greater discounts from drug manufacturers who seek to remain on each state’s preferred drug list. These additional discounts represent the anticipated yearly savings.

According to Cerise, Provider Synergies will work with other states to increase the number of states that participate in the pool.

“Obviously, the more states taht participate, the greater the purchasing power, and the greater our ability to create incentives for better prices or steeper discounts,” he said.