Governor Ed Rendell has proposed a Medicaid “Preferred Drug List” (PDL) as a means to address Pennsylvania’s welfare spending problem. PDLs limit the availability of drugs to Medicaid recipients and force companies to pay “rebates” to states using them if they wish to have drugs included on state-approved lists. Although such “pay-to-play fees” provide state government with new tax revenues in the short term, they cause long-term harm to both job creation and pharmaceutical development.
- Pennsylvania’s pharma/biotech industry should be rewarded, not punished.
- Direct Employment in PA (2003): 34,673 jobs (1)
- Compensation in PA (2003): $87,900 average (1)
- Indirect & Induced Employment in PA (2003): 171,127 jobs (1)
- Tax Revenues (2003): $520 Million (state & local income, sales and property taxes) (1)
- Philanthropic Contributions (2003): $7,400 per pharmaceutical employee nationwide vs. $425 per corporate employee average (2)
- PDLs increase the cost of doing business in Pennsylvania.
- Gov. Rendell’s goal of saving $60 million for the 2005-06 budget through a PDL will cost developers of life-saving and life-improving pharmaceuticals more than $100 million, according to industry analysts.
- Pharma/Biotech companies already paid a projected $174 million in Medicaid pay-to-play fees in 2003. (3)
- Pay-to-play fees in Pennsylvania—also known as “rebates”—will only encourage pharma/biotech companies to consider relocating or expanding operations in more business-friendly states.
- Pennsylvania’s competitor states, including New Jersey and North Carolina, have rejected PDLs because of their negative impact on the pharma/biotech industry.
- Medicaid reform is needed, not “Band-Aid” fixes.
- Reducing drug choices for the sick through PDLs may be politically easier than addressing the fundamental flaws of the Medicaid program, but they fail to solve the program’s unsustainable and systemic problems that will continue to recur.
- Milken Institute Report, “Biopharmaceutical Industry Contributions to State and U.S. Economies” (October 2004); available at http://www.biopharmaimpact.com
- Chronicle of Philanthropy; Pfizer; Annual Reports; Company websites
- National Pharmaceutical Council; Center for Medicare and Medicaid Services