ORONO (AP) – Gov. John Baldacci on Wednesday announced federal approval of an effort by Maine, Vermont and Iowa to pool the three states’ Medicaid drug orders to drive down prices they have to pay manufacturers.

The drug-buying collaborative, known as the Sovereign States Drug Consortium, is the nation’s first state-administered Medicaid supplemental drug rebate pool, according to a joint statement by Baldacci and Govs. Tom Vilsack of Iowa and Jim Douglas of Vermont.

The statement, released after Baldacci’s announcement at a retirement home in Orono, also said the federal government approved the program July 20.

The consortium started purchasing drugs last November and has already saved Maine’s Medicaid program more than $1 million, said Jude Walsh of the Governor’s Office of Health Policy and Finance.

The three governors’ statement said two other Medicaid pools have been approved by the government.

“Medicaid drug costs have grown dramatically in recent years,” said the statement. “Medicaid programs have been innovative in creating cost-saving strategies like preferred drugs lists and appropriate drug utilization programs. The creation of the SSDC is the next step in the ongoing effort to control the increases in drug costs while maintaining a comprehensive drug benefit.”

Walsh said the consortium allows the three states to negotiate directly with 58 drug manufacturers for more than 1,300 medications. It also limits the role of drug purchasing organizations, called pharmacy benefit managers, in order to make sure the states get all of the negotiated savings.

The federal Center for Medicare and Medicaid Services is allowing the drug negotiation arrangement even though the legislation that created the Medicare Part D program specifically bars the federal government from entering into such negotiations, Walsh said.

Several states besides Vermont and Iowa have expressed interest in joining the consortium.

Walsh’s Vermont counterpart, Ann Rugg, said her state explored several pharmacy purchasing groups before signing on with Maine and Iowa. Rugg added that Vermont, like Maine, has expanded its Medicaid program in recent years, so it’s important to do everything possible to contain costs.

Iowa officials anticipate saving the state about $1.8 million a year by buying drugs through the consortium, the state’s pharmacy consultant Susan Parker said.

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Information from: Bangor Daily News, http://www.bangornews.com

AP-ES-08-02-06 1426EDT