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PFIZER, MERCK, BIOTECH FIRMS AND WHOLESALERS MEET WITH CLINTON HEALTH TASK FORCE DRUG WORKING GROUP AS IT APPROACHES APRIL 13 DEADLINE FOR "TOLLGATE" REVIEW

Executive Summary

Pfizer, Merck, representatives of the biotechnology sector and drug wholesalers were among a stream of visitors to the drug working group of the Clinton Administration's health care task force in the the last weeks before the preparation of recommendations for "tollgate" review. The drug working group has a deadline of April 13 to submit revised recommendations for tollgate review of a policy for providing a prescription drug benefit. The working group is writing a drug policy proposal and preparing to defend it through the internal review process. Coinciding with the tollgate deadline, the Pharmaceutical Manufacturers Association has scheduled a press conference for April 13 to discuss its health care reform proposals, outlined at its annual meeting ("The Pink Sheet" April 5, p. 7). The drug working group is said to be developing an interim pharmaceutical pricing policy to set the stage for a drug price program under the final managed competition health care system. The eventual price system is not likely to take effect for several years. Merck's April 2 visit to the working group apparently was part of its continuing effort to sell a detailed voluntary price restraint program of its design. The company is understood to have provided the Clinton Administration with a model contract for agreements between HHS and each pharmaceutical manufacturer. Merck Chairman Roy Vagelos has said Merck will hold average price increases across its entire product line to the Consumer Price Index and that the price of no single product will be raised more than inflation plus 1% ("The Pink Sheet" March 22, In Brief). He reportedly committed the company to putting a plan to that effect in writing at a recent meeting with Sen. Pryor (D-Ark.) ("The Pink Sheet" March 29, T&G-1). The task force's drug group met April 6 with representatives of pharmacy, wholesalers, managed care businesses and hospitals. The group met with Pfizer on April 7 and with representatives of the biotechnology industry on April 8. Earlier, the National Pharmaceutical Council discussed a plan with Clinton task force officials to build in geriatric drug coverage through private insurance/managed care organizations -- with funding for the elderly coverage coming through Medicare Part B. All accountable health programs under the managed competition approach would be required, under NPC's plan, to contain drug coverage for those over 65. By pulling in elderly already covered under programs such as Medicaid and state assistance programs, the NPC plan would attempt to generate savings to help offset the added costs of a full drug benefit. To keep its proposal revenue-neutral, NPC is understood to have suggested a high deductible. All Part B benefits, including drugs, would be subject to an annual $600-$650 deductible and a 20% copay. The political difficulty of such a plan is that seniors who do not currently purchase significant amounts of pharmaceuticals would have to pay all their doctor bills up to $650 and 20% after that, in order to be covered for a benefit they do not currently need. Neither Congress nor the Administration is likely to risk a repeat of the outcry surrounding the Catastrophic Care Act in 1988. That legislation required well-off Medicare beneficiaries who had adequate health insurance to pay higher premiums to fund coverage for needy enrollees.
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