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Executive Summary

MARYLAND HAS NO EVIDENCE OF COLLUSION BY MANUFACTURERS in bidding for the state Medicaid drug program, Ellen Cooper, deputy chief of the state attorney general's antitrust division, told a March 9 meeting on pharmacy law. Cooper said the state would be interested in pursuing allegations of a combined effort by manufacturers to defeat the state's attempts to secure discounts on the purchase of pharmaceuticals. However, she noted that the state would need "some evidence that there was anything else operating [in manufacturer bidding practices] other than independent business judgment." Cooper told a meeting of the American Society for Pharmacy Law that the state attorney general's office has "received no evidence that these decisions [not to bid by the manufacturers] were other than independent decisions." The "outcome" of the decisions not to bid, Cooper pointed out, "has been that the individual pharmaceutical companies have continued to deal with the state of Maryland and have received large sums of money, and that is commensurate with what they would like to do independently." Justice Department antitrust staffer Fred Haynes similarly told the pharmacy law meeting that the federal government would look at collusion "if we have evidence that there has been an agreement and understanding reached by the companies." Haynes added that when Justice opens an investigation, "it's generally because we've gotten some suggestion that there was agreement." A grand jury reportedly was convened in May 1989 to examine the potential collusion and the role of the Pharmaceutical Manufacturers Association and PMA member companies in Medicaid bidding practices ("The Pink Sheet" May 8, 1989, T&G-7). The budget pressure on state drug assistance programs to seek discounts continues to build. New Jersey Medicaid pharmacy consultant Sanford Luger told a March 14 Capitol Hill seminar that "the time has come when states cannot be ignored when we go to a company or companies to say, 'we would like you to compete for your products [with us] the same way that you compete with any other large purchaser.'" Luger appeared at a seminar sponsored by the Institute for Alternative Futures. The New Jersey official maintained that in the New Jersey, New York, Pennsylvania region around metropolitan New York, the state programs and third party programs represent about 58% of the market. Forty percent of the three markets are represented by government programs, Luger said. "The cash paying customer is very rapidly going out of the loop in New Jersey, Pennsylvania and New York." "What we are asking of the manufacturers," Luger declared, "is that they reasonably sit down and negotiate with us, because otherwise it is going to be a legislative solution." He expressed a distaste for legislation to require bidding. "I am not sure that any of us are really prepared to work on another legislative solution to a problem that should be based on marketplace," Luger said. "Why not sit down with me and negotiate as you would with another large purchaser? That is the issue. I don't want to legislate, but I will if I have to," he declared.

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