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GEORGIA MEDICAID TAKES SECOND SWING AT DRUG BIDDING PROGRAM: RFP ISSUED APRIL 19

Executive Summary

Georgia Medicaid is making a second attempt at setting up an outpatient prescription drug competitive bidding program with a new request for proposals issued April 19. The state adopted a law two years ago permitting the Medicaid agency both to seek bids from drug companies and to remove drugs from the Medicaid formulary if a manufacturer fails to bid. However, an RFP issued last summer drew few responses, some of which were refusals to bid ("The Pink Sheet" Nov. 20, p. 18). * Legislation signed April 16 by Governor Joe Frank Harris (D) broadens the definition of drug firms subject to the bidding program to encompass "manufacturers and distributors whose prescription drug products are sold in the state," and also gives the program authority to negotiate prices on single-source drugs. At an April 17 Institute for Alternatives Futures "Foresight Seminar" on formularies, held in Washington, D.C., Georgia Department of Medical Assistance Commissioner Aaron Johnson remarked: "You'd be surprised at how many companies there are out there who are making drugs and don't consider themselves manufacturers." The revised law further stipulates that "if there has been a failure to negotiate or renew a rebate agreement for a specific prescription drug product, the pharmaceutical manufacturer or distributor of that product shall disclose to the department its most favorable pricing arrangements available to state and nonstate government purchasers of such products. If the department determines that the product needs to be included [on the formulary]...the department shall establish the amount of the rebate for such product based upon the price information provided by the manufacturer or distributor." Commissioner Johnson explained that his formulary advisory committee will help to determine which drugs should be subject to the bidding/rebate requirements. Contracts with selected firms will be for one year.
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