In March, Gov. Kathleen Sebelius said that Kansas was just days away from joining a compact with Michigan and other states to buy prescription drugs and save millions of dollars in Medicaid costs.

Four months later, no such deal exists.

And the cost of providing prescription drugs to the poorest of the poor in Kansas is skyrocketing — to $240 million in the last fiscal year.

Kansas is not alone in trying to cope with drug costs.

“They (prescription drug costs) are one of the fastest-growing line items in state budgets, and states are having to confront some of the worst revenue problems since the Depression,” said Cheryl Rivers, executive director of the National Legislative Association on Prescription Drug Prices.

During her bid for office last year and in her State of the State address, Sebelius said it was important for Kansas to join other states in a drug-buying compact. An impending deal with Michigan was announced by Sebelius in March.

But Bob Day, director of Medicaid policy with the Kansas Department of Social and Rehabilitation Services, said plans to join Michigan were on hold.

Michigan had a contract with a company to manage its drug-purchasing program, but federal health care officials had questions about whether the correct bidding process occurred that would allow that company to also manage other states that joined the drug-purchasing group, Day said.

“The feds kind of threw a monkey wrench into it,” Day said. “We have been in conversations with other states, but right now, Michigan is the only player at the table.”

¢ Pending negotiations show difficult times still ahead for prescription drug plan (6-29-03)

Geralyn Lasher, a spokeswoman for the Michigan Department of Community Health, said federal officials had recently given Michigan preliminary approval to bring Kansas and other states into the group.

Federal Health and Human Services Secretary Tommy Thompson “has given our governor his approval, so we’ll be able to go forward with states like Kansas,” she said.

Despite the delay, Day said Kansas has been working on containing costs of prescription drugs for the Medicaid program, which provides health care to an average of 230,000 Kansans.

In 2002, then-Gov. Bill Graves signed into law a measure that allowed the state to put together a preferred list of drugs for doctors to prescribe to Medicaid patients.

The preferred list includes drugs that are cheaper than similar drugs on the market but just as effective as the more expensive drugs, Day said. If a doctor wants to prescribe the more expensive drug, he or she must get state approval and explain why.

In addition to buying the cheaper drugs, the program serves as incentive for drug makers to offer rebates to get their product on the preferred drug list, Day said. He said he expected the state to save $10 million per year under this program.

Day said he didn’t know how much Kansas would save by joining Michigan and other states to leverage further rebates in purchasing drugs.

Lasher, with the Michigan health agency, said that state’s Medicaid program expected to save “tens of millions of dollars.” Currently, Michigan provides Medicaid health care for 1.4 million people , and its drug costs are $1.1 billion per year.

Despite being close in March to signing an agreement with Michigan, Day said Kansas was still not certain it would join Michigan.

Rivers, with the legislative association trying to help states reduce costs, said Kansas officials were wise to continue studying their options.

“A lot of states are looking at the Michigan deal and considering other alternatives,” she said.

For-profit benefits managers, hired by states to handle drug purchases, have been under fire lately for negotiating deals with drug companies that are not beneficial to the states, she said.

She said her association was trying to work on enlisting nonprofit companies to handle these operations.