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Senators find out about super-secret drug contract costing state millions

Wednesday, January 12th, 2011 by Dara Kam

The state of Florida is paying too much for prescription drugs because, in part, its contract with a middleman bars discussion about potential cost-savings, a consultant told the Senate Budget Committee this afternoon.

In addition, the state – the largest employer in Florida – is paying way more than other businesses for prescription drug dispensation, consultant Jeffrey Lewis, who analyzed state agencies’ spending on prescription drugs, found.

The state pays a $4.28 dispensing fee to pharmacies for each prescription filled, more than three times more than the $1.25 market rate.

But the state’s getting ripped off even worse for mail-order drugs, Lewis said. Florida pays a dispensing fee of $4.22 for each prescription filled through home delivery while most other companies pay nothing.

“Paying for mail-order is unheard of,” Lewis said.

Senate budget chief J.D. Alexander requested the analysis of prescription drug spending after running into trouble getting information from state agencies about what they were spending on drugs.

Just before Lewis’ presentation, Alexander, R-Lake Wales, and his committee learned that the state’s budget hole is continuing to grow and is now at an estimated $3.62 billion.

Lewis, the president of the Heinz Family Philanthropies, estimated the state could save about $230 million in two years by revamping how it buys prescription drugs. Florida should renegotiate the contract with Minnesota Multi-State Contracting Alliance and its distributor Cardinal Health, Lewis recommended, among other things.

“This is incredible,” said Sen. John Thrasher, R-St. Augustine.

“Hopefully somebody from the governor’s office is in here. If they’re not I would recommend somebody hand carry this down to the first floor right now,” Thrasher said, waving a copy of the presentation.

Thrasher asked if Gov. Rick Scott, whose office is now scrutinizing all state contracts worth more than $1 million, could issue an executive order to change any of the state’s prescription drug purchasing processes.

“Our governor obviously likes those kinds of things,” Thrasher said.

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