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Michigan Pharmaceutical Plan Allowed to Move Forward

January 17, 2002

Michigan Department of Community Health Director, James K. Haveman, Jr., today announced that the Michigan Court of Appeals has lifted an Ingham County Circuit Court injunction, allowing the Department to implement the Michigan Pharmaceutical Best Practices Initiative.

"We are extremely pleased to move forward with our efforts to offer high quality health care to low-income Michigan citizens while prudently managing costs," said Haveman. "Michigans innovative plan means that beneficiaries will receive the best drugs available, and taxpayers will not have to shoulder the entire burden of rising drug costs."

Using taxpayer funds, the Department spends approximately $1 billion a year on pharmaceuticals for Medicaid and other health care programs. Pharmaceutical expenditures for the 350,000 people in Medicaid fee-for-service alone have doubled in just three years.

"The most important factor to this initiative is that doctors will not be limited to what drugs they can prescribe. If a drug requiring prior authorization is the drug that is medically necessary, that is the drug the person will receive," said Haveman. "But if a more costly drug is not medically necessary, the taxpayers of the State of Michigan should have the right to request that a different drug, determined by a panel of doctors and pharmacists to be clinically safe and effective, be the one that is paid for with taxpayer money."

Virtually all individuals covered by private insurance such as Blue Cross Blue Shield of Michigan or an HMO and the nearly 800,000 Medicaid beneficiaries enrolled in managed-care plans have a prior authorization process in place for certain prescription drugs.

When the Michigan Legislature unanimously passed the Department of Community Health current year budget, it reduced funding $42 million in anticipation of the savings from this pharmaceutical initiative. "If we were not able to move forward with this initiative, it could have had a devastating impact on beneficiaries, since we would then be forced to cut $42 million from health care services," said Haveman.

Michigan officials are optimistic to soon receive federal approval from the Centers for Medicare and Medicaid Services, allowing the prior authorization process to begin on February 1, 2002.