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MEDICAID FLAT REBATES, GERIATRIC LABELING, MEDICARE DRUG BENEFIT AMONG ISSUES THAT WILL BE CONSIDERED IN NEXT CONGRESS, HOUSE AIDE TELLS PUBLIC HEALTH ASSN.

Executive Summary

A bill to require Medicaid fixed-percentage rebates instead of those based on "best price" is among the legislative initiatives that can be expected in the 103rd Congress, David Schulke, aide to Rep. Wyden (D-Ore.), predicted at a Nov. 10 session of the American Public Health Association's Nov. 8-12 annual meeting in Washington, D.C. "We will undoubtedly see another attempt, hopefully from my boss among others, to get the Medicaid flat rebate" into the law "in lieu of the best price," Schulke said. Others reportedly interested in such a change include Sen. Chafee (R-R.I.) and Reps. Waxman (D-Calif.) and Slattery (D-Kan.). Chafee and Slattery introduced bills in the last Congress (S 2950 and HR 5614, respectively) that would have required fixed- percentage rebates of 22% in 1993 descending to 16% in 1995 and beyond. The scaledown in rebates was based on Congressional Budget Office projections that the drug industry will eliminate or raise best prices over time ("The Pink Sheet" July 13, p. 3). Wyden proposed a 1993 change to a permanent flat rebate of 22%, intended to provide greater revenues and to compensate for elimination of generic drug rebate requirements ("The Pink Sheet" July 20, p. 3). Waxman's bill would have kept best price rebates and increased minimum rebates (like the enacted bill, HR 5193); however, (unlike the new law) it would have required a change in 1996 to flat rebates ("The Pink Sheet" Aug. 17, p. 3). One question is whether the recent enactment of legislation to exempt deep discount prices obtained by the Veterans Affairs Department and other government purchasers from Medicaid best price rebate calculations has reduced the impetus for further changes to Medicaid law next year. Schulke suggested that Rep. Wyden also may pursue hearings on the need for FDA to publish final guidelines for geriatric labeling. In response to congressional hearings in 1983, FDA began developing geriatric labeling guidelines. However, although a number of prescription drug products have been introduced with geriatric labeling information, including several recently approved ACE inhibitors, the agency has not yet published final guidelines for such labeling, Schulke said. Schulke noted the greater importance recently placed on the need for better pediatric labeling for prescription drug products. FDA's pediatric labeling initiative "seems to have leapfrogged a much older effort to improve the labeling of pharmaceuticals with respect to their use in the elderly," the House aide said. The agency proposed a regulation on Oct. 16 to require drug manufacturers to supplement their products' pediatric use labeling based in part on studies in adults. Commissioner Kessler announced the proposal two days earlier at a meeting of the American Academy of Pediatrics ("The Pink Sheet" Oct. 19, p. 3). An AAP study had shown that there is no pediatric use information in the labeling of 80% of new compounds approved in the period 1984-1989. Sen. Kassebaum (R-Kan.), who is slated to become the Senate Labor & Human Resources Committee's ranking minority member, plans to introduce legislation to encourage drug companies to develop pediatric use information for inclusion in product labeling. Her proposal would provide an additional six months of exclusivity to companies that fund clinical studies that yield such information ("The Pink Sheet" Oct. 19, p. 5). Orphan drug amendments to place a sales threshold on the market exclusivity of orphan products "will be back next year," Schulke predicted. A cosponsor of the bill is Kassebaum. Her new status as the ranking Republican on Labor & Human Resources "puts her in a much more powerful position to advocate this legislation," he noted. Schulke also suggested that Congress may reconsider legislation by Sen. Durenberger (R-Minn.) to permit states to institute restrictive Medicaid formularies. "If the Durenberger bill passes" next year, "I hope that we will be successful" in limiting states from imposing "some of the very bad" restrictions that were in place before 1990, Schulke told APHA. The bill was introduced for the benefit of states that found they did not cut Medicaid expenditures through the rebate program as much as they would have through restrictive formularies. Under the 1990 Medicaid law (OBRA '90), states generally may not prohibit payment for drugs for which manufacturers offer rebates. The 1990 law may be "too restrictive" on states, Schulke said. "Maybe it makes it too hard for [states] to negotiate with drug companies and get good deals that hospitals and HMOs and others have been able to get through use of formularies and prior approval and DUR," he said. If so, the formulary ban should be revisited, he continued, "but the reason why the restrictions are there is because the states were...seriously interfering with the ability of physicians to get pharmaceuticals they felt were necessary for patients." Wyden may introduce a bill to enhance reporting of adverse drug reaction to OTC products, Schulke suggested. "A very reasonable and minimal adverse drug reaction reporting requirement perhaps would help professionals report to manufacturers [whenever] there has been an adverse drug reaction involving an OTC drug, and perhaps then manufacturers should be obligated to report to FDA," he said. The House staffer suggested that such a requirement would represent "an incremental but important improvement on the flow of information on OTCs, about which very little seems to be known." He acknowledged that FDA and the OTC drug industry have been cooperating in efforts to produce better information about possible drug interactions involving OTC drugs ("The Pink Sheet" May 18, p. 14). A number of proposals that were passed by Congress in the tax/urban aid package (HR 11) but vetoed by President Bush are likely to be reintroduced early in the 103rd Congress. They include R&D and orphan drug tax credits, capital gains tax credits for long-term investments in startup firms and technical corrections to the 1990 Medicaid rebate bill (OBRA '90). HR 11 would have extended the R&D tax credit for one year. Senate sponsors included Sens. Danforth (R-Mo.) and Baucus (D- Mont.), Finance Committee members who are likely to introduce the bill again early next year. A principal House sponsor of the R&D tax credit extension in HR 11 was Rep. Jenkins (D-Ga.), a Ways & Means Committee member who retired. Possible candidates to introduce the extension next year include Ways & Means/Oversight Subcommittee Chairman Pickle (D-Texas) and Ranking Minority Member Archer (Texas), who have sponsored similar legislation in the past. Many supporters of the R&D tax credit, including the pharmaceutical industry, have argued for making it permanent. In the past, Congress has extended the R&D credit for one to three years, but a permanent extension may have an increased chance of enactment next year now that President-Elect Clinton has lent his support. Previous sponsors of the capital gains credit for long-term investments (at least five years) in start-up firms include Reps. Matsui (D-Calif.), Pickle, Johnson (R-Calif.) of the Ways & Means Committee and Sens. Bumpers (D-Ark.) and Brown (R-Colo.). Again, prospects are enhanced during the Clinton Administration in light of the president-elect's endorsement of broad investment tax incentives. It is probable that such bills will be incorporated in a comprehensive bill of tax incentives similar to HR 11 next year. Clinton has said he admires the effective manner in which President Reagan packaged legislative proposals in large, comprehensive (omnibus) bundles that reduced the required number of floor votes during the early part of the Reagan Administration. There is also a "tenuous" possibility that Congress may consider legislation to enhance physicians' drug therapy training, Schulke told APHA. One approach is to provide an incentive for medical schools to improve pharmacology education, "especially geriatric pharmacology," Schulke said. Such an effort could piggyback on some interest Congress has expressed in encouraging medical schools to produce a greater proportion of primary care physicians, he said. Another approach, "very consistent" with congressional interest in creating an Agency for Health Care Policy & Research, might be to encourage comparative study of the safety and efficacy of drugs. Noting that AHCPR lacks the funding to conduct such comparative trials, preliminary concepts have been floated: one would require that comparative trials be conducted as part of Phase IV study, and another would "grant additional exclusivity" to encourage drug companies to conduct "prior to marketing" comparisons of new products to the standard therapies. "I personally don't see anything wrong with that approach," Schulke commented, but many policy makers associate "extra exclusivity" with "extra cost." Rep. Stark (D-Calif.) is likely to reintroduce legislation to encourage development of an AIDS vaccine. Last summer, the California Democrat introduced HR 5893 to establish an AIDS vaccine injury compensation trust fund with money from performance bonds paid by sponsors of experimental HIV vaccines and by excise taxes paid by manufacturers of marketed vaccines ("The Pink Sheet" Aug. 24, T&G-8). Stark noted that several manufacturers have "excellent ideas" for HIV vaccines, but liability concerns inhibit research. The subject of indemnification of HIV vaccine manufacturers was discussed at a recent meeting at the National Institutes of Health. National Institute of Allergy & Infectious Diseases Director Anthony Fauci, MD, noted that Bristol-Myers Squibb "was very concerned about even giving a product to the [NIH] to use that product in a continuation of a Phase I trial unless there was specific legislation" indemnifying the product. Fauci also noted that GP-160 developer MicroGeneSys would not test its vaccine "in Connecticut unless they get a special law" to indemnify the Louisiana firm. Genentech official Marty Rose, MD, said that although his firm plans "to go ahead" with several projects at NIH, it hopes "to have a chance to work with" Stark to address the liability question. Rose added that "everyone in the industry is concerned about seronegatives." House Energy & Commerce Committee Chairman Dingell (D-Mich.) and Health Subcommittee Chairman Waxman (D-Calif.) may diverge on two FDA legislative issues that were on their agenda in the last Congress. The California Democrat reportedly will continue to pursue passage of bills to enhance the agency's enforcement powers and to provide a user fee program for medical devices. However, Dingell, who cosponsored those efforts last year, is said to have cooled to both. His Oversight Subcommittee is investigating alleged management problems both in FDA's field forces and the Center for Devices and Radiological Health. In the Senate, Labor & Human Resources Committee Chairman Kennedy (D-Mass.) has not eliminated the two initiatives from his agenda, but he reportedly does not consider them front-burner issues. One development that eventually could have an effect on the operations of the legislature is the growing support among the electorate for term limits. During the Nov. 3 national elections voters in 14 states joined Colorado in imposing term limits on their representatives to the U.S. Congress. The states include Washington, Michigan and California -- whose Democratic representatives include House Speaker Foley, Dingell, Waxman and Stark. Each of the three states prospectively imposed limits of six years (three terms) in the House and 12 years (two terms) in the Senate; in other words, the tenures of Foley, Dingell and Waxman would expire in 1998. If the limits are upheld, they could undermine the seniority power of such members by giving lame-duck status to their final terms (in the 105th Congress). Senior members of Congress and other opponents of term limits argue that the new restrictions cannot pass constitutional muster and will require a constitutional amendment to become law. Supporters contend that the Constitution's silence on the number of terms members may serve does not signify that states cannot limit them. A constitutional challenge of term limits is expected by 1998.
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