For the week ending Friday, February 16, 2001

The House of Representatives this week completed work on the annual Budget Adjustment bill with the newly elected Republican majority exhibiting its unity throughout the debate on this bill, consistently voting together on proposed floor amendments to the bill. In committee work, the Committee on Health and Welfare advanced H.31, legislation designed to lower the cost of prescription drugs sold in Vermont (see details below). The Committee on Ways and Means continues its work on Act 60 with committee chairman Rep. Dick Marron (R-Stowe) unveiling his proposal for changes this week. Finally, the Committee on Appropriations began work on the FY02 general fund appropriations bill, spending all day Wednesday and Friday hearing from advocates with interests in the appropriations bill. As previously reported, with the many competing demands for the state’s funds, budget negotiations could become unusually tense this year.

In the Senate, the Committee on Finance received a briefing from Attorney General William Sorrell on issues surrounding financial privacy. The Committee on Natural Resources and Energy continued its work on two issues important to the building and real estate industries, Act 250 and on-site septic reform. The Committee on Appropriations continued its review of the House-passed Budget Adjustment bill and the Governor’s recommended adjustments.

Medicaid Reimbursement
This week the Governor’s office presented their numbers on the Medicaid cost shift. The entire presentation included the recognition of a $34 million cost shift from all providers to the private sector of which the hospital cost shift was pegged at $14.3 million. The Governor’s staff admitted the hospital portion did not include reimbursements to Dartmouth Hitchcock (approximately $6 million). However, even if DHMC was included it leaves about a $5 million gap between the Governor’s numbers and the $25.9 million cost shift that VAHHS has identified.

Norm Wright, President of VAHHS, testified Thursday before the House Committee on Appropriations regarding the budget priorities for the association. He presented the Medicaid cost-shift problem to the committee and urged them to increase Medicaid reimbursement levels to providers over three years. VAHHS specifically requested $3.2 million in state funds for FY02, FY03 and FY04, with the federal match, this would almost eliminate the current $25.9 million cost shift.

Wright also addressed the association’s support for the Nurse Loan forgiveness program proposed by the Governor and for the Center for Nursing.

Additional testimony on the Medicaid cost shift was heard from Frank McDougall of Dartmouth Hitchcock before the House Committee on Health and Welfare and from Tom Huebner of the Rutland Regional Medical Center who testified before the Senate Committee on Appropriations.

Prescription Drug Bill Passes out of Committee
The provisions of H.31, the proposal to address the high cost of pharmaceutical drugs, remains nearly the same as stated in last week’s report with a few minor changes. Although the committee was busy with budget reviews this week, they did vote the bill out on a 10-1 vote on Thursday. Rep. Malcolm Severance (R-Colchester) was the lone dissenting vote.

Most members of the committee believed that the bill required a "leap of faith" because several of the provisions and the consequences of those provisions are unknown. However, the majority felt that at least taking some steps as the bill provided that the state would begin a deliberative process to get information, begin education processes, expand prescription drug buying coalitions and federally qualified health centers. The Office of Prescription Drug Cost Control, an independent office reporting directly to AHS secretary, would be given the authority to implement processes such as a formulary to reduce cost of drugs.

Rep. Severance believed that the state might forfeit the $18 million of rebates currently received from drug manufacturers because of the formulary. He was not sure that the drug utilization process and other measures would assure that amount of savings.

Rep. Val Vincent (D-Waterbury) stated that she was convinced by the testimony of Paul Wallace-Brodeur who opined that the formulary was a modified open formulary and that a manufacturer who was not awarded the contract would still have its products on the formulary at a higher cost and that the manufacturer would still have to pay rebates accruing to the federal guidelines. However, that particular manufacturer would see less volume of drug sales resulting in a lower rebate. Others were concerned about the catastrophic drug program, which will be funded only if enough savings accrue to fund it.

The committee worked very hard on this complex issue and most felt that it would be one step in a much longer process that would have to be monitored every step of the way. Due to an enrollment fee provision, H.31 will need to be reviewed by the House Committee on Ways and Means and because of the need for appropriations, the House Committee on Appropriations will also review this bill. Because of these two "stops" it is unlikely this bill will be acted upon quickly by the full House.

Senate Finance Reviews Prescription Price Control Bill
This week Sen. Cheryl Rivers (D-Windsor), chair of the Senate Committee on Finance, presented her draft prescription drug bill. Its purpose is to encourage cost effective use of prescription drugs as well as establish "a prescription drug fair pricing program. The bill is essentially a re-run of S.300, the controversial drug bill from the last biennium. The bill includes the following provisions:

A drug education and utilization system of:

• An electronic database of information comparing therapeutic value, cost, prescribing patterns, a record of patient’s pharmacy utilization, essentially a tracking system for all parties involved in the prescription process
• A uniform formulary of prescription drug for use by public and private health plans, physicians, hospitals, pharmacists, consumers
• Academic and consumer counter detailing
• Continuing medical education opportunities and requirements for Vermont physicians

Consumer Protection Rules for Manufacturers and Pharmacy Benefit Managers

• Health insurance plans-a prescription drug benefit shall not limit the maximum annual claims covered under the plan in an unreasonable manner
• Preservation of confidentiality of patient records
• Protections from certain practices by pharmaceutical company and PBMs such as drug switching programs and making decisions based on finances of the pharmaceutical company

Licensing of Pharmaceutical Companies

• Pharmaceutical companies, PBMs and manufacturers’ agents will be licensed
• Power to Commissioner to collect/to examine books from manufacturers, wholesalers, or retailers such information as necessary to carry out duties

Other Provisions

• The Office of Economic Opportunity will award grants to clinics or non profits to purchase drugs at the lowest price - $275,000
• Expansion of Federally Qualified Health Centers - $277,000
• Establish a VScript Drug Insurance Program and catastrophic program
• Require manufacturers to pay rebates to the VScript program
• Authorize VScript to a act as a wholesale purchaser of prescription drugs
• Expand eligibility for an unsubsidized VScript rebate benefit
• Authorize prescription drug cost controls
• Authorize Vermont’s participation in manufacturer assistance programs

This draft proposal includes the controversial provision for Vermont to regulate the cost of prescription drugs which was the primary reason the last legislature was unable to pass any bill to reduce the costs of prescription drugs.

Coming Up…
The House Committee on Health and Welfare will turn its attention to parental notification all this week, then spend the week before Town Meeting Day break on medical confidentiality issues. The committee will focus on health care costs and H.212, the "Mazur" bill to modify community rating and establish a high-risk pool will probably become a committee topic after the Town Meeting Day break.

 

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