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HHS INSPECTOR GENERAL AND PHARMACY AGREE: HCFA SHOULD FOCUS ON COMPREHENSIVE Rx POLICY, NOT "PIECEMEAL" COST-CUTTING APPROACHES; AWP TOO HIGH, KUSSEROW SAYS

Executive Summary

The Health Care Financing Administration (HCFA) should focus its energies on developing a comprehensive Rx drug reimbursement policy rather than encouraging local cost cutting efforts, HHS Inspector General Richard Kusserow asserted May 20 at the Natl. Assn. of Retail Druggists (NARD) annual legislative conference in Washington, D.C. Noting that federal drug reimbursement policy involves "fragmented" state and federal govt. interests as well as private sector interests, Kusserow declared in response to a question: "You can't attack this thing piecemeal. You need to go at it in a more comprehensive way. . . That requires a great deal of effort, it requires a great deal of thought and a great deal of energy . . . that I have not seen forthcoming thus far" from HCFA. Kusserow's position that HCFA focus on comprehensive policy changes puts him in agreement with NARD and other pharmacy groups, which have been seeking to halt HCFA regional office efforts to set reimbursement levels below average whsle. price (AWP). At the meeting, NARD members reported that HCFA's Region VI (Dallas) is planning a reimbursement policy, effective July 1, that is based on estimated acquisition costs (EAC) 10.3% below AWP. Region VIII (Denver) is reportedly developing a policy, to be effective Aug. 1, that would reimburse based on EACs 15.3% below AWP. Asked whether he would recommend that the Region VI policy change be delayed, Kusserow responded: "I can't make specific recommendations, but I'll do what I can do. I can talk to HCFA." He added that by allowing a "piecemeal" approach around the country, they are "probably putting their axes in the wrong direction." Kusserow stressed that he continues to support the findings of his office's audit last year. The report concluded that states are generally using published AWPs as a basis for establishing EACs and that the AWPs do not accurately reflect the generally lower prices pharmacists pay for Rx drugs. HHS Rx reimbursement task force chairman Robert Helms, PhD, Acting Asst. Secty. for Planning and Evaluation, is assemblying an "option memorandum" for Secty. Heckler to resolve conflicting viewpoints of the group members, Kusserow told NARD. The memorandum "will have the various possibilities of various options that are open to us," Kusserow explained. The memorandum is being circulated among all of HHS' asst. sectys., and will include language applicable to various interests -- such as management & budget, HCFA and the Inspector General -- Kusserow said. "I will tell you," Kusserow said, "that the task force has not been able to gain consensus . . . at the staff level. . . If we can't have it at the staff level, then we will take it to the secty. and let the secty. make the shot. And that is the course of action we want to follow. . . Bomb Helms is in the process of preparing a decision that we're going to put for the secty.'s signature for various options, and ask the secty. to give us her guidance as to which direction she thinks that we should go." The task force, Kusserow continued, has been "trying to find some way in which we can build some certain system within the states' viewpoint, while at the same time preserving a reasonable dispensing fee for the pharmacists, and . . . to look at the advantages of generic over brandname." Kusserow added: "What we're finding is that we get pretty close to it, in the ballpark, as far as ideas are concerned. But we have a great deal of difficulty in finding it in a way that becomes meaningful." Kusserow said he had not studied all of the task force's recommended options for reimbursement reform. But of "the pieces that I have looked at," he said, "most convincing to me is looking at some sort of a . . . generic incentive program, where there is a reimbursement, cost-plus and incentive option with the states. . . Something like that could be worked out. . . It might be worth it . . . for differences geographically, for different markets." At the same time such a program "would seem to offer a fair alternative to what we have now," Kusserow stated.

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