Michigan's Medicaid Prescription Drug Program
from Gongwer News Service, December 14,
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A prescription drug
preauthorization and rebate program that state officials say
saves millions of dollars a year in the Medicaid program has
been upheld by the Court of Appeals. The program limited
doctors to prescribing only certain medications unless they
obtained prior authorization from the state.
The court said the trial court
erred in issuing an injunction against the program, announced
over a year ago, requiring drug manufacturers to rebate a
portion of the cost of drugs provided to the state for Medicaid
patients. The policy requires physicians to obtain prior
authorization to prescribe medications not on an approved state
list in order for the state to reimburse pharmacists for the
cost of drugs provided under various health care plans, though
preauthorization does not apply if the drug manufacturer paid
the state an additional rebate.
The Pharmaceutical Research and
Manufacturers of America, representing drug companies which make
over 75 percent of the brand name drugs in the country, and
mental health advocates quickly challenged the policy that
several other states were examining as they also sought to curb
prescription drug costs.
Community Health Director Haveman
said he was pleased with the decision on a program he said was
carefully designed to meet patients' needs and save taxpayer
funds. "The most important factor in this initiative is that
doctors are not limited to prescribing certain drugs. If the
drug is medically necessary it is still available. If a less
costly drug meets the medical need, it is available without
He said the program cuts costs by
$850,000 per week in programs serving senior citizens, Medicaid
recipients and infants.
Preauthorization was not required
for drugs on a list that was developed by a committee of
physicians and pharmacists, either because the drugs were deemed
medically necessary or the companies agreed to the rebates.
The drug manufacturers and mental
health advocates, including the Alliance for the Mentally Ill,
argued the program was unconstitutional and endangered patients'
lives by restricting access to needed medications.
But the per curiam opinion (Pharmaceutical
Research and Manufacturers of America, COA docket No.) by Judges Jane Markey and Mark Cavanagh and former
Supreme Court Justice Robert Griffin found the Department of
Community Health was authorized by law to implement the policy.
"In the absence of a specifically
defined legislative limitation, when the DCH is delegated the
responsibility of establishing and administering health care
programs, it must also be accorded the concomitant powers to
implement policies that promote the endeavor, including
preauthorization and drug rebate policies," they said in
permanently dissolving the injunction that had been issued
against the program. The program was allowed to go into effect
in February when the Court of Appeals lifted the injunction
while it considered the case.
The court said an express grant of
authority was not needed, and that the department retained broad
authority to administer the program, and noted that for
non-Medicaid programs such as the EPIC program for the elderly,
authorization was specifically contained in appropriations
The court sent the matter back to
the Ingham County Circuit Court, which had indicated it did not
find authority for DCH to implement the program, for a full
ruling on the merits of the case.
Jan Faiks, spokesperson for the
drug manufacturers association, was unavailable for comment late
Susan McParland, attorney for the
Michigan Association of Children with Emotional Disorders, told
the Associated Press a decision on an appeal was not yet made.
"I'm disappointed because of what's at stake here. We know so
many of the consumers are being injured because of these
policies," she said.