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Drugmakers sue state over new rebate law

The state's requiring a rebate for Medicaid list drugs is called illegal.

©Associated Press

© St. Petersburg Times, published August 8, 2001

The state's requiring a rebate for Medicaid list drugs is called illegal.

TALLAHASSEE -- Drugmakers went to federal court Tuesday to challenge a new Florida law that requires a rebate from companies to get their drugs on a list of approved medicines for people on Medicaid.

The Pharmaceutical Research and Manufacturers of America filed the lawsuit against the state's top Medicaid officials.

It argues that a Florida statute that took effect July 1 violates the federal Medicaid law as well as the provision of the U.S. Constitution giving federal law supremacy over state law.

The industry association alleges that the new law doesn't follow federal rules spelling out what steps states must follow if they want to establish a list of preferred drugs for Medicaid, the joint federal-state program for nursing home residents and needy families.

To even be considered for the list, drugmakers must agree to pay a rebate to the state above and beyond the rebate they already pay to be allowed under federal guidelines.

The state anticipates it will save about $214-million with the new law.

Fewer than half the brand-name drugs allowed in the federal Medicaid program are on Florida's list, which is called the "formulary." Doctors who want to prescribe drugs not included on Florida's list must get prior authorization to do so.

That means they're less likely to do so, the lawsuit argues.

"The threat of exclusion from the new formulary and the resulting curtailment of a manufacturer's sales to Medicaid beneficiaries are the means by which the . . . law seeks to coerce manufacturers to pay such supplemental rebates," the lawsuit charges.

Gov. Jeb Bush said he took the lawsuit as a good sign.

"It must mean that we are making progress in curbing costs that have made it harder for us to expand care for the most needy in our state," he said. "And I guess I'll take it as a badge of honor that I'm being sued by the big drug manufacturers about doing what's right."

But Jan Faiks, assistant general counsel for the pharmaceutical organization, said the law limits the access people on Medicaid have to the drugs.

"Our goal is to be sure that every resident, every Medicaid resident in Florida, has access to the drugs their doctors want to prescribe for them," she said.

Faiks said many states have formularies but that they followed the requirements in federal law, unlike Florida.

"The formulary must be based on medical considerations, not financial," she said. "That's the key."

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