Open the books on Medicaid drug costs

By The Des Moines Register

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Economist Alex Brill visited the Statehouse recently to deliver a message to lawmakers: Iowa is wasting Medicaid dollars. The government health insurance program for the poor spent $14.5 million on brand-name drugs in 2009. Brill said the state could save money by instead purchasing less expensive, generic drugs.

The Iowa Department of Human Services, which oversees Medicaid, tells a different story: The vast majority of Medicaid prescriptions - 75.3 percent - are already for generics. Brand-name drugs can be cheaper because the manufacturers give states large rebates, said DHS spokesman Roger Munns.

So which is the truth?

Therein lies the real issue that should concern Iowans: Secrecy. The public can't find out the truth.

That's because federal law prohibits the disclosure of details about negotiations and contracts between drug companies and the government in Medicaid programs. The public can't know what's the best deal - a brand-name drug with a rebate or its generic equivalent.

Congress should change the law to require disclosure.

Tax dollars are used to purchase drugs in Medicaid. Taxpayers should be able to know how the money is spent - and if it's being spent in a way that benefits patients and taxpayers rather than drug makers with a notoriously powerful lobby.

Currently, the lack of transparency means there's no way to verify or dispute Brill's claim that Iowa is wasting millions of dollars buying brand-name drugs. He works for a drug company that makes both generic and name-brand medications. “In my research, I have attempted to calculate the mandatory rebates paid by the drug companies to states,” Brill told the Register. “Of course, you are correct the actual total rebates are confidential and thus the figures I've calculated are best understood as estimates.”

The state may say brand-name drugs are the best deal, but are they? And are they now that the average increase in the cost of these drugs in 2010 was 6.9 percent?

Munns reminded the Register that it is the state's job to “bang really hard on the drug companies to demand a good deal in return for making their products easier for doctors to prescribe to poor people.”

But none of that banging is public. It leaves Iowans in the dark. It makes it impossible for the public to know if the state should be doing something different and more cost-effective.

Besides leaving Iowans in the dark about what is really going on, this means it is impossible to know what, if anything, Iowa needs to do differently. The secrecy has never been acceptable in a program that insures hundreds of thousands of Iowans and uses millions of public dollars.

It is especially troubling considering the new health reform law will expand Medicaid coverage to thousands more Iowans. Congress must ensure transparency in this public program.