States Form Group to Negotiate Drug Costs

As states face large budget shortfalls from rising Medicaid costs, several are forming a nonprofit organization to negotiate lower prices for prescription drugs.

The organization, which is not expected to be operational before the end of the year, marks a growing trend by states to try innovative ways to deal with drug costs.

The new effort, which involves Connecticut, Hawaii, Maine, Massachusetts, New Hampshire, New York, Pennsylvania, Rhode Island, Vermont and the District of Columbia, would affect Medicaid patients as well as scores of state workers.

"Prescription drug prices for states, businesses and individuals has been nothing but up," said Cheryl Rivers, executive director of the National Legislative Association on Prescription Drug Prices, which is organizing the effort. The association is a coalition of state lawmakers from the Northeast who are pushing for lower drug costs. "Many of the states are experiencing their worst fiscal problems ever."

A study released Monday found that nearly all states have cut spending or plan to reduce spending this year on Medicaid, the nation's health insurance for the poor. Overall, states face massive budget shortfalls totaling at least $60 billion going into the next fiscal year. Medicaid costs average about 15 percent of state budgets.

For the Record

* Susan B. Neuman, assistant secretary for elementary and secondary education and a key figure in the implementation of the No Child Left Behind Act, is resigning her post to return to academia. Neuman has taught at the University of Michigan, Temple University, Boston College, the University of Massachusetts and Yale University.

* President Bush has signed a special order to release $450 million to help Russia secure or eliminate nuclear, biological and chemical weapons.

* President Bush and Polish President Aleksander Kwasniewski celebrated their anti-terror alliance and opportunities for closer ties presented by Poland's choice of 48 U.S.-made F-16 jet fighters to upgrade its air force. The purchase was supported with a U.S. government loan, and nearly $10 billion in investment and business deals for Polish aviation factories and a shipyard, and help in selling Polish-made aircraft and helicopters in the United States.

* The administration banned U.S. assistance to a Colombian air force unit after the unit stalled investigations into a 1998 bombing that killed 17 civilians, the State Department said. Colombia has received $2 billion in military aid from Washington in recent years, mainly to fight the South American nation's cocaine industry. It called the decision "inappropriate" and suggested the move would hurt the war on drugs.

-- Compiled from reports by staff writer Michael Fletcher, the Associated Press and Reuters