Published Online: Friday, September 1, 2006

Medicaid officials in 3 states have received a green light from the federal government to form a drug-buying collaborative designed to negotiate lower prices from pharmaceutical manufacturers. The new Sovereign States Drug Consortium combines the drug-buying power of Maine, Vermont, and Iowa in an effort to pressure 58 different drug makers to lower their prices on >1300 medications used by Medicaid patients. The system has been in use in Maine for nearly a year, and officials there said that its Medicaid program has already saved >$1 million.

A key element of the plan involves limiting the role of pharmacy benefit managers to ensure that all the negotiated savings are passed on to the states. A group of 7 other states has formed a similar buying group called the National Medicaid Pooling Initiative, and officials of additional state Medicaid programs have expressed interest in forming similar consortia.

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