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Vermont Commission on International Trade and State Sovereignty

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Prescription drug purchasing, policies and importation. ... Healthy Vermonters discount card. 9. State of Vermont Prescription Drug. Purchasing Programs ... – PowerPoint PPT presentation

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Title: Vermont Commission on International Trade and State Sovereignty


1
Vermont Commission on International Trade and
State Sovereignty
  • Overview of
  • International Trade and
  • Its Impact on
  • Vermonts Health Care

November 27, 2007
2
What Is International Trade and What Are
International Trade Agreements?
  • International trade is the exchange of goods and
    services across international boundaries or
    territories.
  • International trade traditionally was conducted
    according to agreements between two countries.
    Such agreements are referred to as bilateral
    agreements.

3
What is International Trade and What Are
International Trade Agreements?
  • Beginning in 1944 at Bretton Woods, trade began
    to be considered in a global manner and global
    economic institutions were created to help
    regulate its conduct.
  • These institutions include
  • The World Bank
  • The International Monetary Fund (IMF)
  • The Global Agreement on Tariffs and Trade
    (GATT)

4
The International Trading System
  • In the U.S.
  • In 1974, Fast-Track authority was established,
    streamlining congressional consideration of trade
    bills.
  • In 1979, the Office of the U.S. Trade
    Representative (USTR) was created by Executive
    Order.
  • The USTR is part of the Executive Office of the
    President and is not subject to Freedom of
    Information Act (FOIA) requests.
  • USTR formally consults with states through the
    Inter-Governmental Policy Advisory Committee
    (IGPAC) and Single State Points of Contact
    (SPOCs).

5
The International Trading System
  • In 1994, the Uruguay Round global trade
    discussions were completed and the World Trade
    Organization (WTO) was established. Today the
    WTO has 149 members
  • WTO agreements include
  • Goods
  • Services
  • Government procurement
  • Agriculture
  • Intellectual property rights
  • A binding dispute resolution system
  • More than a dozen separate agreements

6
The International Trading System
  • Enacted Since the Uruguay Round
  • North American Free Trade Agreement (NAFTA)
  • U.S.Singapore Free Trade Agreement
  • U.S.Chile Free Trade Agreement
  • U.S.Australia Free Trade Agreement
  • Central American Free Trade Agreement (CAFTA)

7
How Do Trade Agreements Affect Health Care?
  • Trade agreements potentially impact
  • Prescription drug purchasing, policies and
    importation.
  • Licensing of health care providers.
  • Certificates of Need, health insurance, and
    other issues.

8
State of Vermont Prescription Drug Programs
  • Medicaid program covers 146,821Vermonters (2006
    data)
  • Medicaid, Vermont Health Access Plan, Dr.
    Dynasaur
  • VPharm Medicare Part D wrap
  • VermontRx drug coverage for non-Medicare
    eligible elderly and individuals with
    disabilities
  • Healthy Vermonters discount card

9
State of Vermont Prescription Drug Purchasing
Programs
  • Catamount Health (Oct. 1, 2007)
  • Vermont state employees
  • Teachers and municipal employees

10
Statutes Aimed at Controlling Costs
  • Coverage of over-the-counter drugs, 33 V.S.A.
    1998
  • Mandatory generic substitution, 18 V.S.A. 4601 et
    seq.
  • Preferred Drug Lists (PDL) and prior
    authorizations, 33 V.S.A. 1998
  • Medicaid only
  • Multi-state purchasing pool and non-profit
    pharmacy benefit manager (PBM), 33 V.S.A. 1998
  • Supplemental rebates , 33 V.S.A. 2002
  • Importation I-Save Rx
  • No. 2 of the Acts of 2005
  • Mandatory insurance coverage of I-SaveRx, 8
    V.S.A. 4089i

11
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12
Why Are Prescription Drugs a Trade Issue?
  • Domestic challenges to state cost control
    measures
  • PhRMA v. Walsh unsuccessful challenge to
    Maines use of a Medicaid PDL
  • Federal Medicaid law
  • Commerce clause
  • Importation of lower-cost pharmaceuticals
  • Dorgan/Snowe bill would have allowed parallel
    imports
  • USTR wrote a trade agreement that would have made
    passage of the bill a trade violation
  • Vermont v. FDA refusal to allow reimportation

13
Why Are Preferred Drug Lists (PDLs) a Trade
Issue?
  • Because the Australian-U.S. Free Trade Agreement
    (AUSFTA) applies to federal health care
    programs, it addresses
  • The Australian Pharmaceutical Benefit Scheme
    (PBS)
  • Medicaid federal/state partnership
  • Mixed funding
  • Federal law and regulations on pricing and prior
    authorization
  • 1115 waivers
  • Medicare Part D
  • Federal funding
  • Federal law and regulations
  • Private insurers administrating with CMS oversight

14
Why Are Preferred Drug Lists a Trade Issue?
  • Vermonts criteria and procedures for choosing
    the drugs on its PDL may not comply with AUSFTA
  • AUSFTAs preamble requires PDLs to be based on
    drug safety, quality and efficacy.
    Affordability is not addressed and thusit is
    unclear whether it is an allowable criterion.
  • Vermonts Medicaid PDL strives for a balance of
    cost and quality
  • Over-the-counter and generics preferred
  • Manufacturers agree to supplemental rebate
  • Prior authorization needed for drugs not on PDL

15
Why Are Preferred Drug Lists a Trade Issue?
  • AUSFTA has been used to challenge Australias
    PDL
  • Pfizer Ltd Australian case
  • Facts Pfizer argued that VIAGRA should be
    covered as part of Australias Prescription
    Benefit Scheme (PBS). Federal PBS authorities
    declined to include Viagra. Pfizer appealed to
    the Medicines Review Board and lost.
  • Medicines Review Board - required by the
    US-Australia agreement. Gives pharmaceutical
    companies another venue.

16
Why Are Prescription Drugs a Trade Issue?
Generic Drugs
  • U.S. patent law allows pharmaceutical
    manufacturers to keep the formulation of a drug
    private.
  • Brand name drugs are under patent protection.
  • Generics
  • Same drugs after the patent runs out
  • Less expensive than brand name drugs
  • Used as a cost-saving measure in Vermont

17
Why Are Prescription Drugs a Trade Issue?
Generic Drugs
  • Trade Related Aspects of Intellectual Property
    (TRIPS) agreements protect patents of World
    Trade Organization (WTO) members
  • Patents allowed for 20 years from time filed
  • Countries have right to protect public health
  • Compulsory licensing state requires generic
    production for public health reason

18
Why Are Prescription Drugs a Trade Issue?
Generic Drugs
  • AUSFTA and CAFTA
  • Require 5-year period of data used in patent
    approval process
  • Data used by generic manufacturers
  • USTR negotiations seem to prioritize patent
    protection over public health issues

19
Why Are Prescription Drugs a Trade Issue?
Generic Drugs
  • Vermont requires a generic drug preference in
    prescription drug programs
  • cost-saving measure for Vermonters and for the
    state Medicaid program
  • limits on the production of generics will
    increase health care costs to Vermonters

20
Why Are Prescription Drugs a Trade Issue?
Importation
  • U.S. law regulates the sale of drugs, including
    their importation
  • Food and Drug Administration (FDA)
  • Approves drugs for certain uses by specific
    manufacturers
  • Patent law
  • FDA guidance on enforcement
  • Discretion for enforcing when quantity is for
    personal use
  • FDA approval for programs
  • Authority to approve importation programs
  • To date, no program approved

21
Why Are Prescription Drugs a Trade Issue?
Importation
  • Because of patent protection in FTAs, there is
    potential international liability if states
    pursue importation programs (for example, AUSTFA
    and arguably NAFTA).
  • Several states and cities have started
    importation programs to offer less expensive
    drugs.
  • Vermont joined I-Save Rx, an Illinois program.
  • Participants in I-Save Rx are expected to save
    20-50.
  • Efforts are underway to change federal law on
    drug importation.

22
GATS and Health Care Issues
  • GATS rules apply to countries that join the World
    Trade Organization. The rules apply to specific
    sectors.
  • For example, the domestic regulation rule
    currently under negotiation could potentially
    affect health insurance, hospitals and other
    health care facilities, prescription drug
    distribution, medical records and claims
    processing.
  • Regulations must be no more burdensome than
    necessary and may be challenged if they are an
    unnecessary barrier to trade.

23
GATS and Health Care Issues
  • Health Insurance
  • Catamount Health
  • Licensing of Health Care Providers and Pharmacy
    Benefit Managers
  • Other Regulation
  • Certificate of Need restrictions on facilities
    and purchasing of equipment
  • Health Resource Allocation Plan
  • Standards of Care - staffing regulation

24
Results of Interested Party Input
  • Input from the National Legislative Association,
    from state legislators, and from other interested
    parties led to the USTR clarifying the U.S.-Korea
    FTAs application to state health care programs.
  • The U.S.-Korea FTA applies to the health programs
    of the party countries central governments.
  • A footnote to the FTA clarifies that state health
    care programs are programs of regional levels of
    government, not programs of the central level of
    government.
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