The False Seduction of Preferred Drug Lists

A debate is raging in the HIV/AIDS community about how to rein in soaring drug costs without hurting consumer access.

The extremely high prices of the medications that keep someone with HIV/AIDS alive and well are of concern to everyone. Drug costs are also consuming larger and larger portions of our health care dollars. This makes health insurance and care for the uninsured more expensive for each of us as individuals and for us as a society.

At the national level, the politics of drug pricing just played out in the recent Medicare bill that was passed by Congress and was signed into law by President George W. Bush. Thanks to the Pharmaceutical Research Manufacturer’s Association and its legion of Capitol Hill lobbyists the pharmaceutical industry came out winners––at the expense of everyone else.

The new Medicare law prohibits the federal government from negotiating directly with drug companies to obtain reasonably priced medications. As a result, the burden of high drug prices is shifted to the consumer. Thus, Medicare beneficiaries––including tens of thousands of older and disabled men and women with HIV/AIDS–– must pay higher deductibles and co-pays, and follow the dictates of a strict formulary. Unfortunately, there are few prospects for improving the legislation within the Bush administration and the current Congress.

In New York State, the drug pricing battle is being waged under the guise of Preferred Drug List (PDL) proposals, which are seductive because, on their face, they appear to give you something for nothing. The premise is that in exchange for placing a drug on a state’s “preferred” list, the pharmaceutical company that owns the drug will lower its price, thereby saving money. However, the art of seduction doesn’t hold up in the light of day. The truth is that PDLs are very blunt instruments that create savings by hurting consumer access to healthcare in the process of squeezing lower prices from the pharmaceutical industry.

When the famous bank robber Willie Sutton was asked why he robbed banks, he responded, “Because that’s where the money is.” New York State officials have determined that the best place to look for the money is Medicaid, a program which is the largest consumer of medications in the State.

In New York State, billions of dollars are spent on prescription drugs every year for public employees, prison inmates, Medicaid beneficiaries, elderly residents, and the state’s AIDS Drug Assistance Program. This year, New York’s Medicaid program is expected to spend $3.8 billion on pharmaceuticals. With a substantial fiscal gap in the state budget, state and elected officials are looking at reducing drug prices as one way to save money.

Approximately 18 percent of New York’s Medicaid funding is spent on HIV-positive Medicaid beneficiaries, for antiretroviral and other drugs. Therefore, if Medicaid is where the money is and HIV-positive individuals are where the money goes, then clearly HIV-positive individuals will be the ones who suffer the most from the implementation of a PDL, which will cut drug costs for the state, but extract a high price from people living with HIV and AIDS. The complexities of the epidemic require that drug regimens be flexible to fit the changing medical needs of these individuals. However, the rigidity of PDLs does not allow any flexibility in prescribing medications and thus compromises optimal therapy for treating HIV and AIDS.

PDLs are not the solution, especially when there are better, consumer-driven alternatives available such as re-importation of drugs from Canada, which was recently endorsed by Mayor Michael Bloomberg, and the leveraging of the state’s purchasing power to obtain medications at lower prices––known as bulk purchasing. To the detriment of Medicaid beneficiaries and other vulnerable constituents, these alternatives are not being pursued because they threaten the profits of the drug industry who then extract a high political cost from those leaders who support these alternatives.

We can’t expect to enrich the lives of people living with HIV and AIDS if we can’t even provide them with the basics of vitally needed medications. New York State government and elected officials need to re-examine their position on PDLs and determine what is more important, a dollar bill or a human life.

Ana Oliveira is the executive director of Gay Men’s Health Crisis.

We also publish: