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Executive Summary

DRUG INDUSTRY SUPPORT FOR LEGISLATION ENDING DIFFERENTIAL PRICING practices was solicited in an Aug. 2 letter to 140 pharmaceutical company executives from the Community Retail Pharmacy Health Care Reform Coalition, which comprises the independent retail pharmacy association NARD and the National Association of Chain Drug Stores. NACDS President Ronald Ziegler and NARD Exec VP Charles West signed the letter "asking [manufacturers] to join community retail pharmacy in voicing official support for the inclusion of legislative language in the President's health care reform proposal that would end discriminatory pricing practices and its resulting cost shifting." The companies were asked to indicate their position on the issue on a form enclosed with the letter and to return the form by Sept. 1. The coalition noted that it "has proposed to the [Clinton] Administration that the current market distortions caused by discriminatory pricing be resolved through a legislative remedy." The coalition also said the President "has clearly and frequently stated that he favors a health care system in which cost shifting is eliminated." The letter further asserts that "individual prescription drug manufacturers have privately acknowledged that a problem exists with current discriminatory or preferential pricing practices" and that "many" have indicated "that they are in favor of eliminating discriminatory pricing policies in the current marketplace but refuse to do so without a legislative mandate that would require all manufacturers to comply." Elimination of differential pricing also is supported by "state pharmacy associations in 43 states" and by "the Food Marketing Institute and 25 state retail chain drug store organizations," the letter maintains. The coalition contends that "discounts based on real economies to manufacturers, such as volume discounts, should be available to all purchasers on an equal basis." Hospitals, HMOs, mail-service pharmacies and other purchasers have used restrictive formularies and therapeutic substitution as leverage to negotiate price concessions from manufacturers that NARD and NACDS feel have to date been unavailable to retailers.

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