Montana Viewpoint


A new law will help lower the cost of medicine for some Montanans

July 1, 2003

On July 1, most of the new laws enacted by the 2003 Legislature went into effect. I am particularly proud to have written one of them, a prescription drug discount program called Healthy Montana. It’s not the solution to the high cost of prescription drugs, but it’ll help those who need help most.

Healthy Montana will give qualified participants an average discount of 18% on the price of their prescription. The program won’t be available for another year or so, but the law requires the Montana Department of Health and Human Services to begin the paperwork for approval of Healthy Montana by the U. S. Secretary of Health. It will be available to people with disabilities and folks over 62 who have an income of 200% of the federal poverty level.

What’s that jargon mean, and why can’t everybody qualify? The Federal government sets a level of income below which a person or family is said to be “living in poverty.” 200% of that means the income level is twice as high as the official poverty level income. In Montana the federal level of poverty is set at $8980 for a single person, and $12,120 for a family of two. For comparison, the average income per person in Montana is $23,532.The reason Healthy Montana uses 200% is simply because that’s the highest amount that the Secretary of Health has approved for similar programs.

The reason for allowing only the elderly and disabled to participate is the same. Because Healthy Montana is classified as a Medicaid Expansion Program, it has to meet these and other guidelines. Should it be available to all Montanans? You bet, and we’ll work on that next.

Essentially programs such as Healthy Montana use the buying power of state government to leverage lower prices from drug manufacturers. It’s no news to anyone that everyday uninsured Americans pay a higher price for their prescription drugs than anyone in the world. Their cost is also about twice as much as the federal government pays.

For instance, when the specter of an Anthrax plague loomed large on our horizon, Cipro was deemed the best drug to combat the menace. At the time, the feds could pick Cipro up at 43 cents for a 500mg pill. Uninsured Americans had to shell out $5! Different buyers pay different prices for drugs. Typically, where an uninsured citizen would pay $100 for a prescription, an insurance company or HMO would pay $65 to $80, state Medicaid programs about $60, the Feds $50, and the Veterans Administration $45. In every case, drug manufacturers make a healthy profit.

Drug manufacturers don’t like these discount plans and have gone to great lengths to have them declared illegal. They have lost in court every time. They say it cuts into their profit, but then, they also have the highest profits in industry, running at about 18.5% in 1999. They don’t give their executives chump change either.

Folks who qualify for Healthy Montana will have to fill out an annual application and also pay an annual fee of $25. The $25 helps pay for the program, but the biggest funding comes from the Federal government and the drug companies themselves. As a requirement for doing business with Medicaid, drug companies must agree to rebate a portion of the “average wholesale price” to government purchasers. This wholesale price, minus the rebate, is the actual cost to purchasers. It’s a significant amount of money, and for every $3 received as rebates the Feds will contribute about $7 in matching money. Except for $35,000 used to start the program, Healthy Montana will receive no state tax dollars.

How will it work? A member of Healthy Montana can go to any pharmacy that participates in the state Medicaid program (which most do), show a membership card, and pay a discounted charge that will average about 18% off the over the counter price. The state will pay the pharmacy the other 18%, so the pharmacy is completely reimbursed.

It’s not the complete answer to high drug costs, but it’s a start. States, starting with Maine, have had to take the lead in providing drug cost relief because Congress has done little before now, and drug manufacturers have done less. There is currently a bill before Congress that will go a short way towards helping with the cost, but there will not be an adequate solution to the high cost of prescription drugs until the drug manufacturers become better corporate citizens and charge their fellow Americans the same prices they charge Canadians and Mexicans.

[I didn’t do this all by myself: I had impressive support from my House co-sponsor, Dr. Don Roberts, R-Billings; the Montana AARP; Montana Senior Citizens Association; Montanans with Disabilities; and the Montana Department of Health and Human Services. Prescription drug cost information is from the Center for Policy Alternatives.]

Jim Elliott
Phone: 406-444-1556
Mail: State Senate Helena, MT 59620