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REP. WYDEN "SHORTLY" WILL INTRODUCE BILL TO REVAMP DRUG REBATE

Executive Summary

REP. WYDEN "SHORTLY" WILL INTRODUCE BILL TO REVAMP DRUG REBATE provisions enacted in the 1990 Medicaid rebate law, the Oregon Democrat said Jan. 16 at a House Aging Committee/Consumer Interest Subcommittee field hearing on pharmaceutical prices held in conjunction by Rep. Unsoeld (D-Wash.) in Vancouver, Wash. In his prepared opening remarks, Wyden described his upcoming bill as intended to "allow all government programs to earn significant price breaks and ensure that drug companies can no longer penalize private buyers." The bill would consolidate the efforts of all federal agencies that purchase drugs, including Medicaid, Public Health Service clinics, and the Department of Veterans Affairs. Wyden previously has proposed that the V-A might negotiate on behalf of the other agencies ("The Pink Sheet" Oct. 21, p. 3). Wyden's bill would attempt to alleviate the price increases experienced by private buyers, such as hospitals and health maintenance groups, by specifying that any price discounts obtained by these groups would no longer be considered in determining Medicaid discounts. The bill "protects all private buyers...by simply letting them go out and negotiate the best price they can, regardless of what the government pays," Wyden said at the field hearing. He added that "frustrated private customers with little marketplace clout" might want to "join in" with the government buying group. The West Coast hearing helps lay the groundwork for Wyden's upcoming legislation by providing him with ammunition on pharmaceutical price increases seen by Oregon and Washington hospitals, clinics and other purchasers over the past few years and, more specifically, since enactment of the Medicaid rebate program. For example, Andrew McCulloch, Seattle Harborview Medical Center's chief operating officer, reported that the public hospital's pharmacy budget increased 24% in 1991 and it expected to increase 18% this year. Since the passage of the Medicaid rebate law, McCulloch said, "our ability to aggressively take advantage of volume purchasing has been severely curtailed and our drug costs have increased by approximately $1 mil. by factors unrelated to utilization, changes in technology, or anticipated inflation. Of the 42% increase in our pharmacy budget, we estimated that approximately 10% is attributable to inflation, 15% to increased utilization and changes in technology, and the remaining 17% to price increases associated with [the Medicaid rebate program]."

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