Passing the buck

Passing the buck

Harry Truman, our 33rd President, gained notoriety for the phrase “The Buck Stops Here”. Given the way North Carolina makes political decisions old Harry must be turning over in his grave. For the past several days Diabetic Investor has been trying to figure out why North Carolina Medicaid awarded an exclusive contract to Prodigy to provide glucose monitors to the states 50,000 Medicaid recipients with diabetes.

According to North Carolina’s Department of Health and Human Services Secretary Lanier M. Cansler in several interviews with local media outlets the rationale for this decision comes down to one simple fact; over the next two years the state will save over $4 million. According to Brad Deen, spokesman for the department, North Carolina like many states is facing an economic crisis which prompted the state legislature to approve a special law that allows the state to issue no-bid contracts.

When asked why the state chose Prodigy, a relatively unknown company with a checkered business history, Mr. Deen indicated that Secretary Cansler followed the recommendation of Dr. Craigan Gray, who heads the state’s Division of Medical Assistance. Mr. Deen also noted that it was Prodigy who approached the state and he was unaware if any other companies were given the opportunity to provide the state with an even lower price. As Diabetic Investor has previously reported we have received information that the state was actually offered an even lower price from other companies.

According to Prodigy’s Director of Public Relations, Pete Bosak, the company has not received any financial assistance from the state for moving their manufacturing facilities to the state and that all the controversy over this contract is basically sour grapes from the competition. Based on various press reports many had speculated that the state awarded the contract to Prodigy because they had moved to the state. Diabetic Investor never quite bought this explanation as the state also awarded an exclusive contract for insulin syringes to a Minnesota based company although Becton Dickinson (NYSE:BDX) the worldwide leader in insulin syringes employees more than 700 people in the state.

Given the way this story is developing it appears the state is following one of the oldest political strategies by passing the buck as to who is actually responsible for making what for all practical purposes looks like a strange decision. Since his appointment to the post back in April this is not the first time one of the decisions made by Dr. Gray has come under attack. Looking over various news reports it appears that since his appointment Dr. Gray is faced with daunting task of cutting costs and as we have seen from the recent battle over healthcare reform in Washington, when it comes to cutting healthcare costs no one is ever happy.

Playing both sides of the fence, another well established political strategy, Secretary Cansler is trying to appease lawmakers as Dr. Gray appears to be the fall guy. The Secretary himself has come under attack as some state contracts have been awarded to firms the Secretary represented while in the private sector as a consultant. The Secretary for his part has stated that he withdrew himself from these decisions to avoid the appearance of favoritism. This may have been the case however this hasn’t stopped questions from being asked.

Where this goes from here is anyone’s guess.  Will the state, facing continued criticism from patients, diabetes educators and physicians reexamine their decision? Will Prodigy’s competitors use their resources to fight this decision? (As has been reported Roche has already written a letter to the state questioning the validity of the contact.) While this makes for great political theater one fact remains; unfortunately it is the patient with diabetes, powerless over this decision, who loses.