WASHINGTON -- It's July again, when the House and Senatespend several weeks beating their respective budget bills intocongruence so the Congresspeople can escape the heat ofAugust in Washington. July is bad enough.

Buried in this year's House and Senate budget reconciliationbills -- and ominously congruent before the conferencecommittees have even started to meet -- is a provision tocreate Medicaid formularies, Mary Beth Bierut, director offederal government relations for the Biotechnology IndustryOrganization (BIO), told BioWorld.

This measure would save the federal government an average of$55 million annually over five years and save the states nearlyas much out of more than $6.7 billion that both spend annuallyon Medicaid, according to the Congressional Budget Office. Itwould also close Medicaid's 14 percent of the market to drugsthat don't make the list.

The Pharmaceutical Manufacturers Association (PMA) hasassembled a coalition of strange bedfellows to fight themeasure, and BIO has undertaken an independent effort tolobby Congress.

Prior to 1990, states could choose whether or not to haveformularies. The Omnibus Budget Reconciliation Act (OBRA) of1990 barred formularies, but required manufacturers to rebateMedicaid for the use of their drugs. It also created a de factoformulary by requiring doctors to obtain prior authorization forcertain drugs.

"It's a real hassle for them," Richard Stone, vice president of thePMA told BioWorld. "The easy thing to do is to write aprescription for a drug that the state allows without priorauthorization."

As a bone to manufacturers, OBRA required that new drugs beallowed without prior authorization for six months. "Thissoftened the blow of companies having to pay rebates for drugssold to Medicaid, especially for an industry like ours, where thenew drug is often the first or second that the company has evermarketed," Lisa Raines, vice president for government relationsat Genzyme Corp., told BioWorld.

The Coalition for Equal Access to Medicines, the PMA-sponsored coalition on the formulary issue, includes minoritygroups such as Jesse Jackson's National Rainbow Coalition andThe National Black Nurses Association; disease groups such asThe National Multiple Sclerosis Society and The LupusFoundation of America; and even The Peoples Medical Society,a membership group started by Rodale Press that investigatesthe faults of the medical profession.

"They certainly aren't tools of the drug industry," PMA's Stonetold BioWorld of the latter group. "In fact, I don't think theylike us very much. They don't like physicians very much,either."

"I would encourage the biotech industry to reach out to everyconstituency possible," Stone added. "Like our industry, it maybe that our ultimate alliance is with patients."

BIO President Carl Feldbaum told BioWorld that since assumingcontrol of the biotechnology trade association last winter, hehas spoken at breakfasts, lunches and dinners attended bypeople in 40-50 disease groups, more to develop thisconstituency rather than to address specific issues so far.

BIO's lobbying on the Medicaid formulary has mostly beenrestricted to Capitol Hill, said Bierut, and the outlook ispessimistic. She urged companies to contact their Congressionalrepresentatives, particularly those on the conferencecommittees, and added that people should call her with anyquestions.

-- David C. Holzman Washington Editor

(c) 1997 American Health Consultants. All rights reserved.