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HOUSE MEDICARE CATASTROPHIC CARE BILL INCLUDES REP. WAXMAN's GENERIC SUBSTITUTION INCENTIVE; KEY DEMOCRATS RECONCILE DRUG PROPOSALS AT JUNE 30-JULY 1 MEETING

Executive Summary

Rep. Waxman's (D-Calif.) generic substitution incentive will be included in the Medicare drug benefits proposal, which is moving to the floor of the House as part of the catastrophic health coverage legislation. Under the provision, pharmacists participating in the Medicare outpatient drug program would be required to dispense generic forms of multisource products unless the prescriber indicates on the prescription form in writing that a brandname drug is medically necessary. The provision is retained from Waxman's version of Medicare drug coverage that passed the Energy & Commerce Committee. The provision was also originally included in Rep. Stark's (D-Calif.) drug coverage bill. However, the Ways & Means Committee amended the provision in markup, deleting the national generic substitution requirement in favor of individual state substitution rules ("The Pink Sheet" June 29, p. 3). The Stark and Waxman drug coverage bills were reconciled during a July 1 meeting of the House Democratic leadership. The compromise essentially melds Stark's funding mechanism onto the Waxman plan. The compromise retains the Ways & Means funding plan, in which 75% of the cost for the drug benefit will be provided by a flat increase in the Medicare Part B premium and 25% by an income-related supplemental premium used to finance the overall catastrophic care coverage. The final version of the drug plan sets the annual deductible at $500, the level proposed by Waxman. Stark's plan included an $800 deductible. Reps. Dingell (D-Mich.) and Waxman of the Energy & Commerce Committee met with Reps. Rostenkowski (D-Ill.) and Stark of the Ways & Means Committee, Rules Committee Chairman Pepper (D-Fla.), and House Majority Leader Wright (D-Texas) on June 30 and July 1 to work out a unified version of HR 2470. Soon after Congress returns from its Independence Day recess, the new bill will go before Chairman Pepper's Rules Committee to receive a rule governing debate on the House floor. The Rules Committee might consider HR 2470 as early as July 9. Pepper, who also chairs the Health Subcommittee of the Select Committee on Aging, has introduced his own Medicare amendments ("The Pink Sheet" June 29, p. 2). His bill, which would have required a deductible of only $250, is said to have influenced the House Democrats to accept the Energy & Commerce deductible of $500 rather than the Ways & Means figure of $800. However, Pepper declared on July 1 that he intends to add further benefits to Medicare, such as home health care. The Democratic Caucus reportedly will meet the week of July 6 to discuss options for managing HR 2470 before the full House. The expanded benefits favored by Pepper are also expected to be discussed at the meeting. Reimbursement under the unified version of HR 2470 is set at the published AWP of brandname drugs plus a $4.50 dispensing fee for single-source drugs or for multiple-source drugs for which the prescriber has ordered the brandname product as medically necessary. Generic products will be reimbursed at the lower of the pharmacy's actual price or 50% of the brandname product's AWP plus a $4.50 dispensing fee. The dispensing fee is indexed for inflation, as in the bill passed by the Energy & Commerce Committee.
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