In Comments Submitted February 16, NLARx Working Group on Trade Warns USTR Trade Policies Threaten State-Level Drug Price Negotiation and Medicaid Programs

National Legislative Association on Prescription Drug Prices
February 16, 2010

Today the National Legislative Association on Prescription Drug Prices (NLARx) Working Group on Trade submitted comments to the US Trade Representative opposing the expansion of the Special 301 report into the realm of disciplining countries for implementing effective and non-discriminatory pharmaceutical pricing policies, and a recent trend to use trade agreements to restrict evidence-based domestic drug pricing programs.

"These initiatives will directly and negatively affect the capacity of states to provide health care and pharmaceuticals to their residents through existing Medicaid and state-funded programs, and will cripple the ability of states to expand access to health care in the future," said Sharon Treat, NLARx Executive Director and a Maine State Representative.

The Working Group on Trade has been actively involved in providing comments on trade policy related to pharmaceutical purchasing and intellectual property over the past several years, with a particular focus on the implications of that policy for state-implemented Medicaid and health access programs. The Working Group has sought specific guarantees that any chapter on pharmaceuticals in a new trade agreement would not threaten states' ability to manage drug costs through formularies and preferred drug lists (PDLs). USTR staff took up this issue and honored the request from states to clarify in the text of the US-Korea Free Trade Agreement a specific exception for Medicaid.

"Especially in light of USTR's prior willingness to take states' concerns into consideration, we find it disheartening and disturbing that the USTR is now moving forward with efforts to promote new international standards restraining domestic medicine pricing regulations both in the U.S. and abroad," said Connecticut Representative Kevin Ryan, co-chair of the Working Group. "We call on USTR to alter course and publicly announce that it is not in support of such initiatives and halt this use of Special 301."

More than forty states use PDLs for Medicaid and other programs, including state-funded prescription drug benefits for the elderly that “wrap around” Medicare Part D, and discount drug programs that are available to the non-elderly who do not qualify for Medicaid but who lack insurance that provides pharmaceutical coverage. In U.S. states, as in other countries, these policies are being used effectively to reduce costs and promote public health by influencing prescribing decisions with evidence.

Arizona Senator Meg Burton Cahill stated, "Without access to these tools, states would simply be unable to provide comprehensive access to medicines in their Medicaid and other health insurance programs." Burton Cahill is co-chair of the Working Group. She noted that pharmaceutical costs can account for from 10-25% of the cost of Medicaid and other public health insurance programs, even with the rebates and pricing tools currently available.

“At a time when states including Arizona, New Mexico, Washington State and Maine have announced plans to cut these same programs to address the severe budget shortfalls caused by the recession, Burton Cahill said, "USTR’s initiatives are both ill-timed and incomprehensible."

"It is difficult in the extreme for states to understand how the USTR’s efforts to promote new international standards restraining domestic medicine pricing regulations, which will severely increase the cost of public health programs and limit the use of evidence-based tools, square with the Administration's effort to extend health insurance to all Americans," said Rep. Treat.

The National Legislative Association on Prescription Drug Prices' Working Group on Trade helps states establish institutional mechanisms both to provide ongoing oversight over trade policy, and to educate their citizenry and policy makers about the connection between international trade policy and affordable prescription drugs. It is a comprised of state legislators, trade and Medicaid experts, and representatives of state attorneys general. The Working Group is co-chaired by Arizona State Senator Meg Burton-Cahill and Connecticut State Representative Kevin Ryan.

PDF icon  PDF of NLARx Press Release (115 KB PDF)

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