States buy direct to save on drugs

Wisconsin is set to save $63 million on prescription drugs because it started buying directly--via a purchasing co-op--rather than paying HMOs to cover pharma costs. The co-op, which also includes Pennsylvania and Maryland, has enough bargaining power to negotiate rebates and other discounts off the "best wholesale price" drugmakers are bound by law to offer Medicaid programs. Part of the savings also comes from the use of "preferred drug lists," which steer doctors toward cheaper meds before allowing newer, costlier drugs to be prescribed.

The pharma industry has opposed these sorts of moves, saying that HMOs should be responsible for all aspects of a patient's care. Also, according to PhRMA, preferred drug lists can end up costing states more because they might require additional doctor visits and the like.

- read the story in the Milwaukee Journal-Sentinel

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