Last Updated: 2003-06-03 10:03:58 -0400 (Reuters Health)

NEW YORK (Reuters Health) - In a bold move, New Jersey Gov. James McGreevey in February proposed creating a preferred drug list to win better prescription drug prices for the state, but now advocates of the plan say pressure from the influential pharmaceutical industry threatens to kill it.

McGreevey's state budget blueprint for fiscal 2004 estimates that implementing a preferred drug list, or PDL, would save $31.5 million for New Jersey Medicaid and the state's PAAD program, which provides pharmaceutical assistance for seniors and the disabled.

But as the July 1 fiscal year approaches and budget talks heat up, the fate of McGreevey's PDL proposal remains unclear.

"He is backing off his original position. We know that," asserted Bridget Devane, an organizer with New Jersey Citizen Action, a PDL advocate.

Dena Mottola, executive director of the New Jersey Public Interest Research Group, questions the administration's resolve. "It seems like they're not going to do it," she said.

McGreevey spokesman Micah Rasmussen said the administration has had plenty of dialogue with the pharmaceutical industry, including discussions about the PDL, which drugmakers staunchly oppose. "Definitely, it's something they're asking him to work on," he said.

But Rasmussen insisted that nothing has been finalized, a point that the pharmaceutical industry underscores.

"Our industry is continuing to dialogue with the governor's office and meet with state officials and make the case," said Hollie Gilroy, a spokeswoman for the HealthCare Institute of New Jersey, which represents 22 drug and medical technology companies in the Garden State.

"It's a work in progress," she said.

New Jersey's budgeting process is in a state of flux partly because of the state's changing fortunes. The Garden State expects to receive $561 million of the $20 billion in aid to financially strapped states that Congress approved last month as part of the president's tax-cut package. That windfall could result in a shift in funding priorities.

Defenders of the PDL proposal say establishing a list of preferred drugs will help contain rising drug costs and preserve state programs that help residents get affordable prescription drugs. Similar initiatives have saved millions of dollars for Michigan and Florida.

"We think it was a fiscally responsible move and politically courageous move by the governor," said Douglas Johnston, government affairs officer for AARP New Jersey.

McGreevey also has proposed several other cost-cutting initiatives for prescription drugs, including a supplemental rebate program, a mandatory generics program and a reduction in reimbursements to pharmacies.

But his plan for a preferred list of drugs elicits the sharpest reaction from the pharmaceutical industry.

"We were told that PhRMA was supposedly okay with the generics but was 'going to war' over the preferred drug list," AARP's Johnston told Reuters Health.

PhRMA, or Pharmaceutical Research and Manufacturers of America, has filed lawsuits in Michigan and Florida challenging those states' preferred drug list programs, but so far the courts have upheld the cost-control efforts.

HINJ, the voice of New Jersey's brand-name drug manufacturers, warns: "A PDL would jeopardize the health of patients, threaten the autonomy of doctors, and put state taxpayers at risk."

Drugmakers are discussing alternatives with the state, such as implementing disease management programs, Gilroy said.

As more states begin to weigh PDL proposals of their own, New Jersey is seen as a crucial battleground. Many of the world's pharmaceutical giants maintain corporate headquarters and research facilities there, contributing more than $22 billion to the state's economy in 2002, according to a recent HINJ study.

A PDL in New Jersey would "send a clear signal -- if it can happen here, it can pretty much happen anywhere," Gilroy said.