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MEDICAID USE OF NEW MEDICARE CLAIMS PROCESSING SYSTEM WILL BE CONSIDERED, REP. WAXMAN TELLS NACDS; WARNS OF CONGRESSIONAL INTERVENTION IN Rx DRUG AD AREA

Executive Summary

Rep. Waxman (D-Calif.) plans to review the possibility of extending the new Medicare electronic drug claims processing system that will be set up under the Medicare Catastrophic Coverage Act to cover Medicaid reimbursement as well, the California Democrat noted in an Aug. 29 presentation to the National Association of Chain Drug Stores' annual Pharmaceutical Conference in San Diego. A repeated question on the new Medicare outpatient drug plan, Waxman said, is whether Medicaid reimbursement for drugs can be administered under a system that will be established to process Medicare drug claims. The question, he noted, "flows from dissatisfaction with the way Medicaid operates," which leads to pharmacies "getting overcharged more easily." Waxman acknowledged that "it is not clear whether the new Medicare system is transferable or desirable for Medicaid." However, he added: "I am sure that federal and Medicaid officials are considering the matter and I certainly intend to watch it as well." In addition, the new system is expected to generate data that will allow Congress to monitor drug pricing as well as drug use by the elderly, Waxman pointed out. "Volumes of data will be collected through the electronic billing system," Waxman noted. "These data will enable us to answer questions about the quantity and types of drugs taken by the elderly and about physician prescribing practices." The new system will also chart "through mandated reports . . . the impact on Medicare of drug price increases, the cost of new high-price drugs and increased pharmacy charges," Waxman said. "No longer will the case [on drug price inflation] be made by irate constituents alone," he declared. "Price increases will be recorded in readily available congressional reports, which will become part of congressional debate, especially when premium increases are perceived to be necessary." Waxman tied the proliferation of direct-to-consumer ads for prescription drugs to the increased attention on drug costs by health care providers. He predicted that the cost of such advertising will contribute to addition drug price inflation. "This shift in advertising strategy will be expensive to consumers," he stated. "All companies will be forced to follow." Waxman maintained that since drug companies "rarely assume new costs," the end result will be that the drug industry will "just raise prices." Waxman cautioned that Congress may step in and seek tighter FDA regulation of prescription advertising. "If FDA does not establish firm guidelines that restrain the [pharmaceutical] companies' marketing, Congress may have to intervene," he warned. Waxman's efforts in the drug advertising area to data have been directed at industry. He was one of several congressmen instrumental in delaying the prescription drug ad coalition's challenge to FDA's current full disclosure policy regarding direct-to-consumer drug advertising. However, his comments to NACDS apparently signal an interest in closer monitoring of FDA's regulation of drug advertising, particularly television ads. "The shift to television advertising will be potentially dangerous," Waxman said. "Consumers simply are not equipped to act on the information they receive." If done at all, Waxman continued, "television advertising should inform and promote early diagnosis and treatment." He said that television advertising "for the sake of advertising a product serves no educational purpose."
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