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Executive Summary

Senate Special Committee on Aging Chairman Pryor (D-Ark.) is considering two days of price hearings this summer, with a first session tentatively set for June 15. Pryor disclosed his plans for the hearings on May 2 to NARD's annual legislative conference in Washington. The two primary targets of the investigation, according to Pryor's NARD comments, will be (1) drug price inflation and (2) multi-tier pricing. On inflation, Pryor declared the hearings will examine "why it is justified for the pharmaceutical firms, the manufacturers, to constantly and continually raise their prices." The argument that the increases are needed to fund research "is not good enough a justification for me, especially when we see the same drugs sold in London, England . . . at probably one-third the [U.S.] price." On multi-tier pricing, the hearing will focus on the effect of non-profit discounts on prices for the regular market. The two-tier pricing system is "gouging the American public," the senator contended. "I will continue saying that until I see something different." Pryor indicated that the Senate hearings will have the support of the committee's counterpart in the House. The Arkansas Democrat reported that he has been discussing the issue with Rep. Pepper (D-Fla.), the chairman of the House Select Committee on Aging, and has "been assured the cooperation of [the] congressman." Because Pryor is a member of the Finance Committee, the senator has the option of building a hearing record in the Aging Committee, which as a "special committee" has no legislative jurisdiction, and then referring that record to the Finance Committee. The Finance Committee has jurisdiction over the Prescription Drug Marketing Act. Pryor could use his position on Finance to try to add a ban on multi-tier pricing to the marketing sanctions contained in the diversion law. In recent years, there has also been an effort to get the Finance Committee and the House Ways & Means Committee interested in restricting the criteria for non-profit price differentials under the Nonprofit Institutions Act. The senator said he was confident that the hearings would "get to the bottom of" the issue. "We have some very strong and potent documentation that we will be revealing at the appropriate time," Pryor said. Although Pryor is relatively new to the scene in terms of pharmaceutical legislation and investigations, as chairman of the Aging Committee, he has a very experienced senior committee staffer to guide the hearings. The staffer, David Schulke, was previously with the minority staff and was an important figure in the development of the Catastrophic Health Care outpatient drug program. Pryor also has NARD lobbying heavily on the pricing issue. NARD Exec VP Charles West comes from Pryor's home state. House Ways & Means/Health Subcommittee Chairman Stark (D-Calif.) told the NARD legislative conference that he expected information from the upcoming Medicare outpatient drug program to affect price discounting situations in the drug industry. Medicare is "not going to pay a multiple pricing structure as a government" program, Stark told NARD. The Californian indicated one of the fundamental threats facing pharmacy from its complaints about differential pricing when he noted that the government will push for the lowest across-the-board prices it can get.

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