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NARD SUPPORTS SEN. PRYOR’s MEDICAID BILL IN EFFORT TO GET "EQUAL ACCESS"

Executive Summary

NARD SUPPORTS SEN. PRYOR's MEDICAID BILL IN EFFORT TO GET "EQUAL ACCESS" to special prices offered through manufacturers' differential pricing policies to certain classes of retailers, NARD VP-Government Affairs and General Counsel John Rector told a second-day session of the Health Industry Distributors Association's April 2-3 annual legislative conference. "Our organization and a coalition of others have approached this general subject [of multipletier pricing] under the rubric of equal access to price. We want equal access to price under the same terms now available to many of our competitors," Rector said. NARD is part of a "coalition" of pharmacy associations supporting Sen. Pryor's (D-Ark.) legislative proposal to encourage state Medicaid bidding programs for pharmaceuticals ("The Pink Sheet" March 26, p. 3 and April 2, p. 3), Rector said. "Most importantly," he added, pharmaceutical pricing "is a consumer issue, and consumer groups are beginning to speak out on this." The independent retail pharmacy lobbyist predicted that "there's not likely to be action in the remaining third of the 101st Congress" on the Pryor proposal, "but there's very likely to be some very serious activity in the next Congress." Rector discussed legislative plans for the pharmaceutical industry by Pryor and Rep. Brooks (D-Texas) in the context of a panoply of possible congressional activity. "There's some thought of linking profitability to patent," Rector noted. "There's considerable thought to addressing whether or not the pharmaceutical manufacturers should continue to have access to a whole series of special R&D tax credits; this is one of the principal areas of focus," he continued. "Some few are talking about price controls; that's not likely to catch on." In addition to supporting Pryor and Brooks, who has asked the General Accounting Office to study the possible antitrust implications of multi-tier pricing, NARD will back additional congressional efforts to pressure the industry into concessions on the price issue. For example, both Pryor and Rep. Stark (D-Calif.) have questioned the industry's need for several tax breaks it receives -- particularly R&D tax credits. "We're not supporting price controls, and we believe in patents...and patent protection," Rector said. However, "we believe that patents should be the vehicle for recouping R&D and not necessarily special R&D tax credits." The GAO report requested by Brooks "will be the basis of a series of hearings in the [Texas Democrat's] House Judiciary Committee on the subject of multi-tier pricing of pharmaceutical products," Rector continued. In the pharmaceutical industry, "there's a huge subsidy being paid by the general consumer" for patients of "protected" retailers, which include HMO pharmacies, hospital pharmacies, dispensing physicians, mail-order pharmacies and nursing home pharmacies, he said. Because manufacturers ostensibly can offer such retailers price discounts under the Non-profit Institutions Act exemption to the Robinson-Patman antitrust law, Rector contended that it is appropriate that Pryor's legislation would force manufacturers to sell prescription drugs under the Medicaid program at reduced prices. "Medicaid is one of those pure charity-type entities that the Nonprofit Institutions Act contemplated in 1938; it serves 100% fully indigent persons," he said. It is also appropriate to try to reduce Medicaid pharmaceutical expenditures, he maintained: "The Medicaid drug program [annually costs] about $3.3 bil. now. It just surpassed physician payment under Medicaid; it's the fastest rising component of the Medicaid program. It also amounts to about 13% of pharmaceutical manufacturers' sales."
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