by Carolyn James

S.C. Leg. Dave Bishop, the bill's sponsor

Capitalizing on the success the County had when it individually sued the tobacco companies, Suffolk is once again going it alone, this time hiring a law firm to sue prescription drug companies for market manipulation. The county has charged that companies Merck, Bayer, Pfizer and others have conspired to increase wholesale costs for prescription drugs, forcing Suffolk taxpayers to pick up the bill.

"This is the new tobacco litigation that saved taxpayers tens of millions of dollars," said S.C. Leg. Davis Bishop who sponsored the measure allowing the county to put out a bid to hire a law firm to represent it in the lawsuit. "There is strong evidence to show that these companies engaged in price fixing and, like tobacco, the county is filing its own lawsuit to get in there and fight for our taxpayers."

The Social Services Department in Suffolk County paid out $9 million in 1995 for prescription drug benefits under its Medicaid program. Bishop estimates that this year those costs will rise to $25 million. The overall share of the Medicaid budget required for pharmacy costs has continued to grow as well, from 6.7 percent or $9.4 million in 1995 to 11.6 percent or $16.9 million in 1999 and 13.9 percent or $10.7 million from January through May of 2002.

Most of those increases were attributed to an increase in the Medicaid-only caseload the county carries, which, according to Kim G. Brandeau, senior legislative analyst represents SSI and nursing home recipients who represent the single costliest Medicaid component.

The problem is compounded in Suffolk, which is self insured and offers a prescription program for its employees. The costs of that program have also risen dramatically over the past five years, said Bishop.

In addition, the National Institute for Health Care Management, a non-profit group that conducts research on health-care issues, issued a report in April of this year which found that prescription drugs in the US continues to be the fastest growing component of health care and has risen 15 percent or more per year over the past several years. It also found that

•spending on prescription drugs accounts for 10 percent of the health care costs in the US and have disproportionately caused a sharp upturn in overall health costs;

•Medicaid spending for outpatient drugs increased an average of 18.1 percent a year from 1997 to 2000, compared to 7.7 percent for total Medicaid expenditures;

•there has been an increase in the volume of prescriptions filled. Simply put, more people are taking more expensive medicines for a wider array of health related problems.

"While a portion of these increases is due to an increase in the number of recipients, and the availability of more prescription drugs, a large part of the problem is caused by unfair wholesale price increases passed along to government for Medicaid prescription drugs," said Bishop. "And those costs are out of control."

Not so said a pharmaceutical industry official. Other factors must be taken into account.

"At our company pricing has been below inflation over a ten-year period," said Nehl Horton, a Pfizer Pharmaceutical spokesman. "And while prices have gone up, it has been drive by utilization, not price."

Horton said that statistics show that more people are availing themselves to innovative, new medications that actually help cut health-care costs in other areas. "The people who takes these medications, which are the result of research and development by pharmaceutical firms, are hospitalized less, have shorter hospital stays and fewer trips to the emergency rooms, as well as require less long-term care," he said. "Our view is that our products bring great benefits to the health care system and actually save money."

The Kaiser Family Foundation has reported that two federal settlements made last year against Bayer Corporation and TAP Pharmaceutical Products "exposed price manipulation by drug companies," supporting Bishop’s claim and that of others that wholesale drug prices have been inflated by the drug manufacturers for profit.

Already 35 states have joined to repeat the nationwide success of class action lawsuits against the tobacco companies. They have initiated lawsuits against the drug companies for price fixing, and while New York has not, to date, joined that effort, the county will, by hiring special counsel to represent the interests of Suffolk’s taxpayers, have the option of negotiating a settlement in conjunction with the state’s case, if it proceeds, or settle on its own. That will be decided on the basis of what county officials see as being in the best interests of the county taxpayers," said Bishop who pointed out that Suffolk got millions of dollars more by settling with the tobacco companies on its own.

"There is no question in my mind that we are talking about recouping millions of dollars from these drug companies," said Bishop.

The County is currently soliciting law firms to work on a contingency fee basis to handle its case, with a maximum of $10,000 for out-of-pocket expenses.