Vermont bargains for better drug prices

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(Host) The auditor of accounts says Vermont should strike a better bargain with a pharmacy benefits company that serves state employees. But the state says it recently won important financial concessions from the company and that more savings are possible.

VPR’s John Dillon reports.

(Dillon) Auditor of Accounts Elizabeth Ready says the time is right for some hard negotiations with the company that provides drug benefits for state workers, their families and retirees.

Ready says Express Scripts Incorporated and other pharmacy benefit managers are under pressure around the country. The Vermont Personnel Department just announced a new contract that will save $1.5 million. Ready says that’s a good start, but the state needs to press harder for additional savings.

(Ready) “I think we can we do better. While other states are suing Express Scripts for fraud and manipulation of price, Vermont is extending its contract for another two years. I think that while offering very small savings, this contract is not transparent. We don’t know what the prices are. We don’t know what the rebates are and the amendment will really allow business as usual.”

(Dillon) The pharmacy benefit companies say they use their market power to obtain discount drugs prices. The discount comes because the state pays a percentage of a drug’s average wholesale price.

(Ready) “But we really don’t know what that price is. In some cases generic drugs could be marked up several hundred percent from the actual cost of the drug, which means receiving a certain percentage off that price is not necessarily a good a deal. So basically, when you have a transparent contract, you know what the pharmacy benefit manager is paying.”

(Dillon) According to Ready, another problem is that the state just extended the contract for two years. The auditor and Chittenden County state Senator Jim Leddy want the state to negotiate more savings. State Personnel Commissioner Cynthia Laware says that’s exactly what the state is doing.

(Laware) “We haven’t left the bargaining table. What we have done is tried to take advantage of price concessions we were able to negotiate with Express Scripts without any change in our employee benefits. And this is clearly just the first phase. But I think the sooner we can put the lower pricing structure into place, obviously the more advantageous for our employees and retirees as well as for the state.”

(Dillon) Laware says that even though the contract was extended, it can be reopened if the state believes it can strike a better deal.

For Vermont Public Radio, I’m John Dillon in Montpelier.

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