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Federal Court Approves State’s Medicaid Drug Savings Plan

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Like other states, Florida is experiencing runaway cost increases in Medicaid, the federal/state program which provides medical care for the poor. One particular area of concern has been the cost of prescription drugs (unlike the Medicare program, Medicaid covers medication costs). Last year the Florida legislature took steps to control those drug costs by establishment of a state “formulary,” or list of approved drugs.

The concept of a formulary is not really new. Managed health care plans (including HMOs) often maintain similar lists of approved drugs. Any physician wanting to prescribe a medication not on the list must either get approval before writing the prescription or change to a drug that is on the approved list.

Florida’s approach is different in two regards. First, the formulary is advisory rather than mandatory. While a prescription for any drug on the list is approved automatically, any drug not on the list requires the prescribing physician to first call the state to request permission. The pharmacist suggests drugs that are on the formulary instead, but if the physician insists he or she is permitted to issue the prescription for a non-formulary drug.

The other difference in Florida’s approach to a formulary is that drugs are included on the list based not on tests of efficacy, or reports of limited side-effects, but on the willingness of the manufacturer to pay a “supplemental rebate” (usually at least 10% of the drug’s cost) to the state. In other words, Florida’s formulary lists only those drugs which will cost less than the pharmaceutical manufacturer is entitled to charge according to federal regulations.

In the first three months of the new program, the state reported that over half of the prescriptions that would have been written for a non-formulary drug were switched to the approved, lower-cost alternative. Concerned about the effect of this approach on its members, a national pharmaceutical trade group brought suit to enjoin the state from operating its formulary program.

After the Florida program was upheld by the Federal District Court, the industry appealed. The Eleventh Circuit Court of Appeals, sitting in Atlanta, Georgia, agreed with the District Court and dismissed the pharmaceutical industry’s challenge to the Florida formulary law.

Florida’s inclusion of cost effectiveness in its drug program did not violate federal law, ruled the Circuit Court of Appeals. In fact, Florida’s program is not really a “formulary” at all, but merely a “prior authorization program.” Since doctors are guaranteed the right to prescribe the drug of their choice after talking to the state pharmacist, Florida’s plan is permissible under federal Medicaid law. Pharmaceutical Research and Manufacturers of America v. Meadows, September 6, 2002.

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Robert B. Fleming


Robert Fleming is a Fellow of both the American College of Trust and Estate Counsel and the National Academy of Elder Law Attorneys. He has been certified as a Specialist in Estate and Trust Law by the State Bar of Arizona‘s Board of Legal Specialization, and he is also a Certified Elder Law Attorney by the National Elder Law Foundation. Robert has a long history of involvement in local, state and national organizations. He is most proud of his instrumental involvement in the Special Needs Alliance, the premier national organization for lawyers dealing with special needs trusts and planning.

Robert has two adult children, two young grandchildren and a wife of over fifty years. He is devoted to all of them. He is also very fond of Rosalind Franklin (his office companion corgi), and his homebound cat Muninn. He just likes people, their pets and their stories.

Elizabeth N.R. Friman


Elizabeth Noble Rollings Friman is a principal and licensed fiduciary at Fleming & Curti, PLC. Elizabeth enjoys estate planning and helping families navigate trust and probate administrations. She is passionate about the fiduciary work that she performs as a trustee, personal representative, guardian, and conservator. Elizabeth works with CPAs, financial professionals, case managers, and medical providers to tailor solutions to complex family challenges. Elizabeth is often called upon to serve as a neutral party so that families can avoid protracted legal conflict. Elizabeth relies on the expertise of her team at Fleming & Curti, and as the Firm approaches its third decade, she is proud of the culture of care and consideration that the Firm embodies. Finding workable solutions to sensitive and complex family challenges is something that Elizabeth and the Fleming & Curti team do well.

Amy F. Matheson


Amy Farrell Matheson has worked as an attorney at Fleming & Curti since 2006. A member of the Southern Arizona Estate Planning Council, she is primarily responsible for estate planning and probate matters.

Amy graduated from Wellesley College with a double major in political science and English. She is an honors graduate of Suffolk University Law School and has been admitted to practice in Arizona, Massachusetts, New York, and the District of Columbia.

Prior to joining Fleming & Curti, Amy worked for American Public Television in Boston, and with the international trade group at White & Case, LLP, in Washington, D.C.

Amy’s husband, Tom, is an astronomer at NOIRLab and the Head of Time Domain Services, whose main project is ANTARES. Sadly, this does not involve actual time travel. Amy’s twin daughters are high school students; Finn, her Irish Red and White Setter, remains a puppy at heart.

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Matthew M. Mansour


Matthew is a law clerk who recently earned his law degree from the University of Arizona James E. Rogers College of Law. His undergraduate degree is in psychology from the University of California, Santa Barbara. Matthew has had a passion for advocacy in the Tucson community since his time as a law student representative in the Workers’ Rights Clinic. He also has worked in both the Pima County Attorney’s Office and the Pima County Public Defender’s Office. He enjoys playing basketball, caring for his cat, and listening to audiobooks narrated by the authors.