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APhA's ENDORSEMENT OF SEN. PRYOR's S 2000 DRUG COST CONTAINMENT BILL

Executive Summary

APhA's ENDORSEMENT OF SEN. PRYOR's S 2000 DRUG COST CONTAINMENT BILL cites both the bill's call for examining payments for pharmacy cognitive services to patients and the potential for restraining drug inflation. The American Pharmaceutical Association supported the bill when introduced Nov. 21 by Sens. Pryor (D-Ark.), Cohen (R-Maine) and seven colleagues ("The Pink Sheet" Nov. 25, p. 4). In a Dec. 6 statement explaining its support for the bill, APhA said it "considers the legislation a breakthrough because it will examine the feasibility of paying pharmacists separately for their drug therapy management services." The study is part of a demonstration project on Medicare outpatient drug coverage that is authorized by the bill. The Senate legislation would reduce Sec. 936 tax credits provided for companies with manufacturing plants in Puerto Rico if their product prices increase faster than general inflation. Up to $ 200 mil. annually in resulting savings would be used to fund the five-year, 15-site Medicare demonstration project. The bill further would establish an advisory commission to review drug pricing trends and study the possibility of establishing a drug price review board patterned on the one that operates in Canada. APhA did not comment specifically on using the tax code to penalize pharmaceutical manufacturers for price increases but maintained that, at present, "pharmacists bear the weight of cost containment efforts" related to pharmaceutical products, and price increases "have reduced pharmacy's ability to provide needed services." APhA stated that it "has seen the negative effect of price controls on pharmacy practitioners and does not advocate price controls in the pharmaceutical industry. However, voluntary adoption of more reasonable pricing practices by industry are critical to overall cost containment strategies." The association recommended two modifications to the bill. First, newly-approved products rated "1A" by FDA, denoting new chemical entities providing significant therapeutic improvement, should retain their full tax credits in the first year. This approach "maintains incentives for drug companies to develop more breakthrough therapies," APhA said. The association also suggested that some of the savings yielded by the bill should be earmarked for FDA to help accelerate the drug review process.

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