‘Secret’ document details fed price for drugs

'Secret' document details fed price for drugs

MATT GOURAS, Associated Press

HELENA — The low rates charged for prescription medicine in Canada — just across the border from Montana but out of reach for many poor and uninsured Americans — makes the high cost of some prescription drugs in the United States sting a bit more for Montana Gov. Brian Schweitzer.

But Schweitzer, long an advocate for cheaper prescription drugs, is telling news organizations he can't turn over a proprietary document that could aid the public interest by providing the real cost of individual drugs.

Schweitzer said he went to great lengths — by pestering the drug industry and having his chief of staff sign a nondisclosure agreement — to get a 112-page spreadsheet detailing the federal discounts allowed for more than 5,000 drugs. Schweitzer said he doubts any other governor has the document, which is not routinely given even to the state agencies that administer Medicaid.

"I would like to stand on the highest mountain in Montana, and shout price-by-price, rip-off by rip-off, the shenanigans here showing how much more the American consumer is paying," the governor said.

The Associated Press requested a copy of the price list last fall and was turned down by Schweitzer, who otherwise considers himself a champion of open government.

The AP, in conjunction with other news organizations, followed up by co-signing a letter by an attorney insisting upon the document's public release, saying that a document in the governor's possession is a public information. But the governor's office rejected the request, saying a federal law guarantees that the prices are confidential.

Schweitzer said he is reluctantly rejecting a request from several news organizations to see the confidential list. But he has made it clear it wouldn't hurt his feelings if news outlets sued to get it.

The net price paid by the state is shielded from public view in this manner: The state pays retail for the drugs, but then is given a series of lump-sum rebates covering the discount. The net price for individual medications remains secret.

Magellan Medicaid Services of Virginia, the contractor Montana pays $500,000 annually to obtain rebates, is adamant that federal law protects the confidential information.

The company, in a signed affidavit, reminded the governor in December he could not disclose the Centers for Medicare and Medicaid Services information.

"CMS drug rebate data are confidential under federal law," said Douglas Brown, director of rebate contracting for Magellan Medicaid Administration. "Thus, the disclosure of CMS drug rebate information by the state would be a violation of federal law."

Brown said that the information is a trade secret, and making it public would hurt the industry.

He said his company does not want potential competitors to see how it negotiates the rebates with drug-makers because it would reduce Magellan's advantage. The company considers the rebate information a trade secret.

Magellan did not return a call seeking specific comment for this story. The Pharmaceutical Research and Manufacturers of America, which represents the medical drug industry, said no one was available to comment.

Schweitzer called the discount process a "phony baloney rebate scheme," and bashed Congress for setting up a system where the state has to pay Magellan to get a price cut he believes is pre-determined anyway.

"What the heck did I need those guys for?" Schweitzer said. "I told those Magellan guys this is crap. We are not going to have any secret deals."

The governor's chief legal counsel, in a letter last week to the news organizations, agreed with the industry that Centers for Medicare and Medicaid Services rebate information is protected from disclosure under federal law. Ann Brodsky also said the Supremacy Clause of the United States Constitution trumps the Montana Constitution's robust right-to-know that ensures government documents are open to the public except in cases of individual privacy.

So the price the government pays contractors for everything from bridges to computer services are all a matter of public record — but the price paid for prescription drugs remains off limits. In Montana, nearly a tenth of the state's one million residents are covered by Medicaid, and the state pays more than $60 million a year for prescription drugs.

The governor said he has reviewed with staff the 112-page spreadsheet and found the government in some cases pays as much as 75 percent less than cash customers. The average savings over 20 common drugs would be 46 percent, he said.

Despite that, Schweitzer said he has found that Congress and federal officials have yet to negotiate prices as low as can be had by simply driving across the border and buying the drugs at retail in Canada.

He has failed in attempts to get federal permission to import the drugs from Canada and to let the state buy the medicine through a discount given the U. S. Department of Veterans Affairs.

He currently has a waiver request asking the federal Medicaid agency to allow Montana to create a prescription drug program to sell drugs to all Montanans through its state Medicaid program so everyone could get the discount. The governor argues it is unfair to charge one group of people far less than another group of people for the same product.

The federal government has yet to respond to that request.

HELENA — The low rates charged for prescription medicine in Canada — just across the border from Montana but out of reach for many poor and uninsured Americans — makes the high cost of some prescription drugs in the United States sting a bit more for Montana Gov. Brian Schweitzer.

But Schweitzer, long an advocate for cheaper prescription drugs, is telling news organizations he can't turn over a proprietary document that could aid the public interest by providing the real cost of individual drugs.

Schweitzer said he went to great lengths — by pestering the drug industry and having his chief of staff sign a nondisclosure agreement — to get a 112-page spreadsheet detailing the federal discounts allowed for more than 5,000 drugs. Schweitzer said he doubts any other governor has the document, which is not routinely given even to the state agencies that administer Medicaid.

"I would like to stand on the highest mountain in Montana, and shout price-by-price, rip-off by rip-off, the shenanigans here showing how much more the American consumer is paying," the governor said.

The Associated Press requested a copy of the price list last fall and was turned down by Schweitzer, who otherwise considers himself a champion of open government.

The AP, in conjunction with other news organizations, followed up by co-signing a letter by an attorney insisting upon the document's public release, saying that a document in the governor's possession is a public information. But the governor's office rejected the request, saying a federal law guarantees that the prices are confidential.

Schweitzer said he is reluctantly rejecting a request from several news organizations to see the confidential list. But he has made it clear it wouldn't hurt his feelings if news outlets sued to get it.

The net price paid by the state is shielded from public view in this manner: The state pays retail for the drugs, but then is given a series of lump-sum rebates covering the discount. The net price for individual medications remains secret.

Magellan Medicaid Services of Virginia, the contractor Montana pays $500,000 annually to obtain rebates, is adamant that federal law protects the confidential information.

The company, in a signed affidavit, reminded the governor in December he could not disclose the Centers for Medicare and Medicaid Services information.

"CMS drug rebate data are confidential under federal law," said Douglas Brown, director of rebate contracting for Magellan Medicaid Administration. "Thus, the disclosure of CMS drug rebate information by the state would be a violation of federal law."

Brown said that the information is a trade secret, and making it public would hurt the industry.

He said his company does not want potential competitors to see how it negotiates the rebates with drug-makers because it would reduce Magellan's advantage. The company considers the rebate information a trade secret.

Magellan did not return a call seeking specific comment for this story. The Pharmaceutical Research and Manufacturers of America, which represents the medical drug industry, said no one was available to comment.

Schweitzer called the discount process a "phony baloney rebate scheme," and bashed Congress for setting up a system where the state has to pay Magellan to get a price cut he believes is pre-determined anyway.

"What the heck did I need those guys for?" Schweitzer said. "I told those Magellan guys this is crap. We are not going to have any secret deals."

The governor's chief legal counsel, in a letter last week to the news organizations, agreed with the industry that Centers for Medicare and Medicaid Services rebate information is protected from disclosure under federal law. Ann Brodsky also said the Supremacy Clause of the United States Constitution trumps the Montana Constitution's robust right-to-know that ensures government documents are open to the public except in cases of individual privacy.

So the price the government pays contractors for everything from bridges to computer services are all a matter of public record — but the price paid for prescription drugs remains off limits. In Montana, nearly a tenth of the state's one million residents are covered by Medicaid, and the state pays more than $60 million a year for prescription drugs.

The governor said he has reviewed with staff the 112-page spreadsheet and found the government in some cases pays as much as 75 percent less than cash customers. The average savings over 20 common drugs would be 46 percent, he said.

Despite that, Schweitzer said he has found that Congress and federal officials have yet to negotiate prices as low as can be had by simply driving across the border and buying the drugs at retail in Canada.

He has failed in attempts to get federal permission to import the drugs from Canada and to let the state buy the medicine through a discount given the U. S. Department of Veterans Affairs.

He currently has a waiver request asking the federal Medicaid agency to allow Montana to create a prescription drug program to sell drugs to all Montanans through its state Medicaid program so everyone could get the discount. The governor argues it is unfair to charge one group of people far less than another group of people for the same product.

The federal government has yet to respond to that request.