PHS OFFICE OF DRUG PRICING PROGRAMS WILL OVERSEE DISCOUNTS

PHS OFFICE OF DRUG PRICING PROGRAMS WILL OVERSEE DISCOUNTS called for in legislation enacted last year. The office will be housed in the Health Resources & Services Administration's Bureau of Primary Care and will be headed by Marcia Alvarez, formerly the bureau's chief pharmacist. Deputy director will be Stephen Wickizer, a pharmacist previously with the Office of the Surgeon General. The final paperwork for the office has not been completed. The PHS office has drafted two Federal Register notices as part of implementing the law, which extends discounts to both the Veterans Affairs Department and PHS grantees ("The Pink Sheet" Nov. 9, 1992, T&G-11). The law provides that PHS-funded facilities will receive either the V-A's Federal Supply Schedule price or a discounted price at least as low as Medicaid's net rebated price. One of the upcoming regulations is aimed at preventing duplication of rebates and discounts, that is, ensuring that the drug manufacturer is not assessed a Medicaid rebate on top of the discounted clinic price when a Medicaid patient goes to a public clinic. Initial attempts to identify potential "entities" eligible for the discounts have uncovered about 9,000 organizations which may qualify, PHS said. That estimate will need fine-tuning: there appears to be duplication on the list, and many of the grantees have subgrantee health facilities that may be eligible. The Office of Drug Pricing Programs hopes to send a letter to the eligible entities by early April describing the discount program and outlining recipient responsibilities. The bulk of facilities eligible for the discounts are community health centers and migrant health centers. The office has received discount agreements from more than 450 manufacturers. The 1992 law establishes Medicaid as the enforcement mechanism, i.e., Medicaid coverage of a product would be withdrawn if a manufacturer refuses to provide the rebate requirements for either V-A or PHS grantees. V-A is indicating that it has received agreements from all manufacturers to which the department sent a contract. The law as enacted had called for all discount agreements with the V-A and PHS to be signed by Jan. 1, 1993, but the Health Care Financing Administration decided to treat that deadline as flexible since PHS had not sent its agreements out to manufacturers by that date. While V-A and HCFA health care reimbursement programs have given them experience relevant to setting up the drug rebate and discount programs, PHS had less experience in this area. As part of its effort to build upon existing procedures, the PHS has consulted with state Medicaid officers. In addition, the agency is disseminating information about the new law to associations and professional societies whose members include PHS grantees.