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Executive Summary

Red Book or Blue Book listings do not assure adequate inventory and should not be the basis for Medicaid selection of lowest price generics, the National Wholesale Druggists' Association (NWDA) maintained in its Oct. 17 comments to the Health Care Financing Administration (HCFA) on Medicaid drug reimbursement reform. The drug wholesalers association stressed that "prudent business judgment" dictates that its members do business with firms only if conditions not required by Red Book/Blue Book listings are "adequately met." For instance, said NWDA, in order to reduce the price of their products, a supplier advertising in the Red Book or Blue Book might "skimp" on a host of variables: adequate inventory, service levels, product liability insurance coverage, return goods policy, and satisfactory expiration dating. NWDA observed, however, that there is no assurance that a company will remain in business to ensure supplies of products at advertised prices. NWDA reiterated support for a reimbursement plan based on marketplace pricing and a voucher collection system to reduce claims processing costs. These two Medicaid principles have been the cornerstones of a seven-association coalition position expressed to HCFA Administrator William Roper last May. In its October statement, NWDA endorsed reimbursement of usual and customary charges for prescription drug products, adding that "if necessary, a screen could be used to assure that overcharges would be detected." Medicaid reforms should be aimed at "reducing the growth of government by . . . eliminating regulations which are unnecessary and counterproductive," the association said. Regarding a voucher system, NWDA pointed out that "claims processing in some states are reportedly as high as 75 cents per claim, which may amount to as much as $150 mil. each year based on 200 mil. claims annually." In addition to reducing administrative costs, said NWDA, an electronic claims system "would reduce fraud, errors and would improve utilization review."

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