Governor Announces Prescription Drug Savings

Governor Announces Prescription Drug Savings

Governor John Baldacci today announced promising results from the first months of operation of the Sovereign States Drug Consortium (SSDC), a first of its kind prescription drug rebate pool that Maine began with Iowa and Vermont earlier this year. Approved by the federal government for operation in July 2006, the SSDC enables partnering states to control increases in drug costs while maintaining a comprehensive drug benefit through Medicaid. In part due to the savings achieved from participation in SSDC, Maine is collecting an estimated $12.2 million in supplemental rebates in calendar year 2006. The State is anticipating in calendar year 2007 an additional $2.6 million in savings (above the FY 2006 $12.2 million saved) - directly as a result of the SSDC.

"This innovative program is another successful effort by the State of Maine to reign in cost increases and preserve crucial prescription drug benefits to Maine people," said Governor Baldacci. "Savings to the State will continue to ensure that we provide the best benefit possible at the lowest cost."

The State of Maine has been a nationally recognized leader in prescription drug policy. Earlier this year, Governor Baldacci instituted a critical safety net to preserve medications for many of Maine's seniors during the rollout of the federal Medicare Part D program. The Governor provided immediate help to ease the transition of Maine's most vulnerable seniors to Part D program, and he covered the cost of incorrect charges to beneficiaries as a result of failures in the Part D system.

The Baldacci Administration, along with the other participating states' governors, created the SSDC because of concerns about losing rebates when the federal Medicare Part D program began. With the creation of SSDC, Maine has not only not lost rebates, but has surpassed previous rebates. Maine is once again using its power to negotiate, at the same time when the Federal Part D program explicitly prohibits rate negotiations.

Maine uses prior authorization and preferred drug lists to substantially increase the percentage of the drug budget that is returned to the state in the way of rebates. These rebates have gone from 20% prior to state FY 2000, up to 33-35% presently. The combination of promoting the most cost-effective drugs and maximizing rebates has allowed the State to go well beyond mitigating annual drug price increases. These policies have actually reduced net drug expenditures per member every year since state FY 2002.

The SSDC enables partner states to build on current cost-saving strategies. Governor Baldacci joined Governor Tom Vilsack of Iowa and Jim Douglas of Vermont in August to announce the program, stating: "Unlike the Medicare Drug Benefit states have control over what we cover under Medicaid and how much we pay for it. The preservation of the benefit we provide our citizens is a top priority. We must control spending to be able to afford that coverage. In the absence of federal strategies, it has been necessary for states to be creative in finding ways to contain costs."

The SSDC provides member states the ability to leverage their collective covered lives to negotiate for discounts in drug costs. This program allows transparency in drug costs. States have access to all bids by pharmaceutical manufacturers, collectively review the bids and then independently decide which is appropriate for each state.

"This is a common sense collaborative approach Maine has undertaken with other states that is already yielding positive results," said Governor Baldacci. "I encourage other states to partner with Maine, Iowa and Vermont, and by doing so, additional savings can be achieved for all."

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