State lawmakers and Gov. Bill Ritter made cheaper prescriptions their first order of business this legislative session.

Ritter early on signed an executive order allowing Colorado to join a multistate pool to get steeper discounts on prescriptions for the 500,000 state residents whose low income qualifies them for Medicaid.

Then, both chambers passed Senate Bill 1, which Ritter signed Feb. 5. It directs a state agency to negotiate discounts on generic drugs for the 398,000 Coloradans who don't have health insurance and whose income is less than 300 percent of the federal poverty level.

To House sponsor Alice Madden, D-Boulder, the success of Senate Bill 1 followed five years of defeat.

"With generics, there will be no direct-to-consumer advertising costs, no research-and-development costs to pay for," said Senate sponsor Bob Hagedorn, D-Aurora. "Generics are a commodity. The more popular they are, the cheaper they get."

Former Gov. Bill Owens vetoed similar bills, saying they would make it harder for the disabled to get the specialty brand-name drugs they need at a reasonable price. Lawmakers who worked against the measures also say such programs infringe on the free market by setting limits on how much pharmacies can charge.

Now the spotlight will be on the state's Department of Health Care Policy and Financing, which will try to negotiate the same steep discounts for generic and prescription drugs that most other states already receive.

"This is where HCPF has to earn its keep - negotiating good prices," Hagedorn said.

Most states restrict their multistate purchasing negotiations to Medicaid populations. Colorado will be one of the few states that will include those who earn too much money to qualify for Medicaid, but who don't have insurance because they can't afford it or their employers don't offer it.

When patents expire

The generic drugs offered in Colorado will be medicines that have come on the market after their original patent has expired.

When the Food and Drug Administration approves a new drug, the company that developed it gets a patent that can last several years, meaning that it's the only company that can sell that brand.

When the patent expires, the FDA allows other companies to make the same drug. Because these companies don't have to foot the research-and-development costs, their expenses are much lower.

"Generic drugs are good medicine, but because they're generic, they've had some kind of stigma to them," Hagedorn said. Last year, several studies found that generic drugs in many cases were better than the new drugs being introduced by the brand-name manufacturers, he said.

It's hard to anticipate the savings possible for the state's consumers.

Louisiana, Maryland and West Virginia estimated a collective savings of $63 million a year for their three-state drug-buying pool that covered the 1.3 million people eligible for Medicaid in those states.

If Colorado's programs are as successful, the discounts for the 500,000 people on Medicaid and 398,000 modest-income uninsured could total $43 million.

Ritter's executive order lets Colorado join a multistate pool to obtain discounts. HCPF will spend the next several months reviewing a half-dozen such pools to see which makes the most sense for the state to join.

Over the next few months, a board of doctors and pharmacists will devise a preferred drug list made up of medicines that have proved most effective for the greatest number of people. Those drugs would be targeted for the steepest discounts in negotiations.

The negotiating skills honed for the executive order will come in handy on SB 1, too, as HCPF officials try to convince generic drug manufacturers to offer steep discounts in exchange for assuredly higher sales.

"The pharmacies will purchase the generic drugs directly," HCPF Executive Director Joan Henneberry said. "We intend to use our purchasing power and negotiating skills with pharmaceutical companies to get the best prices we can."

HCPF will be meeting with large chain pharmacies and independent drug stores to see what kind of prices are going to work.

Stores such as Wal-Mart, for which a pharmacy is a side business, can offer steep discounts on drugs as a way to get people into the store, she said. But the program has to work for the independent pharmacies as well.

The small stores must have seen something they liked because their association, Rx Plus Pharmacies, supported the legislation. So did AARP of Colorado, the Colorado Commission on Aging, the Colorado Senior Lobby, Colorado Public Interest Research Group and the Colorado Progressive Coalition, among others.

Senate Bill 1

• What is it? Establishes the Colorado Cares Rx Program, which would provide generic drugs at discounts.

• Who's eligible? Those without insurance whose income is less than 300 percent of the federal poverty level - $29,000 a year for a single person; $60,000 for a family of four - and people with high-deductible insurance with little or no prescription drug benefit.

• How many Coloradans will qualify? About 400,000.

• How much money will people save on prescriptions? About 80 percent compared with the cost of brand-name drugs.

• Are there any other costs? Participants will pay a one-time fee of no more than $20.

• When does it start? Applications will be accepted starting Jan. 1.

• How many drugs will be available? Up to 10,000 types.

• What to do? Watch for announcements for application forms.

scanlon@RockyMountainNews.com or 303-442-8729