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Government 'Legitimizes' Drug Product Selection
Regulators &legislators Government 'Legitimizes' Drug Product Selection For more than a decade the American Pharmaceutical Association has been attempting to restore the pharmacist's professional role in drug product selection (DPS). Just six days before the opening gun of the 1979 Congress, the Carter administration grabbed national headlines with two major "initiatives" aimed at curbing rising health care costs-both in the area of DPS. In a rare joint appearance, HEW secretary Joseph Califano and Federal Trade Commission chairman Michael Pertschuk announced what this column had reported last month (see American Pharmacy, February 1979, page 38): • Publication of an FTC-developed Model Drug Product Selection Law; • Release of a draft of a Food and Drug Administration approved list of 5,000 prescription drug products, some 2,000 of which have approved therapeutic equivalents. In a special section of the FTC report supplied at the press conference, the commission staff said: "Pharmacists are found by MDs, hospitals, researchers, and themselves to be qualified by their formal and continuing education to select drug sources competently and more efficiently than MOs. The establishment of drug formularies and the increased dissemination of other drug product information add to the assurances that pharmacist source selection can save consumers money without sacrificing quality in health care." The report, the speeches, the model law, and the FDA list all have a ring of APhA. Even the adoption by the agencies of the term "drug product selection" is a significant bow to America's largest association of pharmacists. To the surprise and delight of many, the model law is brief, simple, and concise-"a clean bill," as APhA had recommended.
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FTC's chairman Pertschuk (right) and H EW secretary Califano in rare joint appearance.
Upping the ante, Califano also announced that by the end of this year the Health Care Financing Administration would set maximum cost limits for all of the therapeutically equivalent drugs on FDA's list that meet the Maximum Allowable Cost (MAC) program's requirements. This action could lead to all thirdparty payments being pegged to the equivalency list.
Expanding Professional Roles Together the three new federal initiatives give credence to the APhA-backed movement to expand the pharmacist's role in drug product selection and, according to administration officials, "cutting costs for consumers." The FTC model law is an attempt to improve on the piecemeal-and sometimes restrictive-post-1970 revisions of the more than 40 state antisubstitution laws. The model law also would permit the pharmacist to retain a portion of
the cost savings to the consumerto derive an additional fee for dispensing drug product equivalents and counseling the patient . (The law does not specify any fixed proportion of savings which the pharmacist must pass on to the consumer. Instead the government expects that competitive forces will stimulate pharmacists to pass on "considerable savings.") The FDA-approved equivalency list provides pharmacists with the support needed to prevent litigation in the case of substitution (even though FTC says there has never been an instance where a pharmacist has been held liable for legally selecting a lower cost brand name drug product or for selecting the product source of a generically written prescription). The mode 1 law also includes an optional provision further protecting the pharmacist. Like several existing state laws, the model law requires that the phy~ sician write "medically necessary''
American Pharmacy Voi.NS19, No.3, Mar.1979/120
1
on prescriptions of brand name products when drug product selection is not permissible. The model law also stipulates that the patient must be informed that the pharmacist has selected a lower cost equivalent drug product and must be given the right to refuse the product selected. This provision is intended to encourage pharmacists to help educate consumers about the cost benefits of drug product selection. "Under this law," Califano said, "when a doctor writes a prescription for a high-priced brand name drug, a licensed pharmacist will be able to select, instead, a lower cost ... product that the Food and Drug Administration has determined is medically equivalent." FTC claims its studies prove that the American public could save as much as $400 million every year "if pharmacists were free to fill prescriptions with lower cost generic drugs-drugs which FDA says are every bit as safe and therapeutic as brand name drugs," Pertschuk said. FDA Lists to Aid In Drug Product Selection More important to the practicing pharmacist is the proposed "FDA List of Approved Prescription Drugs with Therapeutic Equivalence Evaluations." The draft list contains some 5,000 drug products which, according to Califano, account for about 75 percent of prescription drugs sold in this country. "The only drugs not on the list," FDA says, "are those which are still . being examined for effectiveness and those which were marketed be:I fore 1938 when FDA first required • proof of safety." Only about 2,000 of the drug products on the list offer therapeutic equivalents, however. Another 2,000 are manufactured under current patents by a single manufacturer. The remaining 1,000 "have not yet been shown to have therapeutic equivalents," according to FDA. To be regarded as therapeutically equivalent, drugs must:
• Contain identical amounts of $1 Million in Grants the same active ingredient; Available for Studies • Be manufactured in an FDAOn Drug Prescribing approved plant; • Meet all quality and purity t - - - - - - - - - - - - - - - - - - 1 standards; Up to $1 million in grants is being • Be adequately labeled; offered by the National Center for • Affect the body in the same Health Services Research (NCHSR) way. to support studies on issues and The proposed FDA list will be cirmethods involved in improving the culated for public comment until quality and ecopomy of drug preApril12. A final list is expected to be scribing. issued by summer. Grant proposals are being invited Several groups, including the from academic institutions, state Pharmaceutical Manufacturers Asand local government agencies, and sociation, have already attacked nonprofit organizations or indiboth the model law and the FDA viduals. list. NCHSR, which has been addressBut American Pharmaceutical Asing a variety of problems associated sociation staff and members have with the delivery of health services worked with both FTC and FDA to in this country, has focused on drug try to insure that both initiatives represcribing because of what it calls fleet the concerns and interests of "a wide range in the quality of drug American pharmacists. prescribing." NCHSR indicates that Also coming later in 1979 is the most of the studies will deal with "Guide to Prescription Drug "the assessment of the the effects of Prices," a new directory listing the various methods designed to imsellers and distributors from which prove drug prescribing." particular drugs can be obtained, All proposals are due to NCHSR and the specific prices they charge, by April1, 1979. Grant awards will Califano said. be made before October 1. Informa"More than 90 percent of the getion on the program may be obneric drug products in this country tained by calling (301) 436-6920 or are produced by the very same com436-6198. o panies that market products under their own brand names," Califano pointed out. "The FDA has concluded that for drugs evaluated as therapeutically equivalent, there is no general difference in quality, safety, or medical . efficacy between brand name drugs and generic drugs. Thus substantial savings to consumers are possible, with no loss in the quality of drugs used." FTC chairman Pertschuk said the government moves will "stimulate an outbreak in competition for both manufacturers and pharmacists." "Business," he said, "often fights 51 Madison Ave. New York, N.Y. competition as vigorously as it 10010 Tel. (212) 683-3089 fights regulation. Robust competi*XIV, 1975. tion is a cure for pernicious regulation. And it can be a prescription to fight inflation as well."
E...,lsity~
WAx,N.F~
COIIIacl Crocla.
-WES
._ Arnerican Pharmacy Voi.NS19, No.3, Mar.1979/ 121
9
8
FTC's chairman Pertschuk (right) and H EW secretary Califano in rare joint appearance.
Upping the ante, Califano also announced that by the end of this year the Health Care Financing Administration would set maximum cost limits for all of the therapeutically equivalent drugs on FDA's list that meet the Maximum Allowable Cost (MAC) program's requirements. This action could lead to all thirdparty payments being pegged to the equivalency list.
Expanding Professional Roles Together the three new federal initiatives give credence to the APhA-backed movement to expand the pharmacist's role in drug product selection and, according to administration officials, "cutting costs for consumers." The FTC model law is an attempt to improve on the piecemeal-and sometimes restrictive-post-1970 revisions of the more than 40 state antisubstitution laws. The model law also would permit the pharmacist to retain a portion of
the cost savings to the consumerto derive an additional fee for dispensing drug product equivalents and counseling the patient . (The law does not specify any fixed proportion of savings which the pharmacist must pass on to the consumer. Instead the government expects that competitive forces will stimulate pharmacists to pass on "considerable savings.") The FDA-approved equivalency list provides pharmacists with the support needed to prevent litigation in the case of substitution (even though FTC says there has never been an instance where a pharmacist has been held liable for legally selecting a lower cost brand name drug product or for selecting the product source of a generically written prescription). The mode 1 law also includes an optional provision further protecting the pharmacist. Like several existing state laws, the model law requires that the phy~ sician write "medically necessary''
American Pharmacy Voi.NS19, No.3, Mar.1979/120
1
on prescriptions of brand name products when drug product selection is not permissible. The model law also stipulates that the patient must be informed that the pharmacist has selected a lower cost equivalent drug product and must be given the right to refuse the product selected. This provision is intended to encourage pharmacists to help educate consumers about the cost benefits of drug product selection. "Under this law," Califano said, "when a doctor writes a prescription for a high-priced brand name drug, a licensed pharmacist will be able to select, instead, a lower cost ... product that the Food and Drug Administration has determined is medically equivalent." FTC claims its studies prove that the American public could save as much as $400 million every year "if pharmacists were free to fill prescriptions with lower cost generic drugs-drugs which FDA says are every bit as safe and therapeutic as brand name drugs," Pertschuk said. FDA Lists to Aid In Drug Product Selection More important to the practicing pharmacist is the proposed "FDA List of Approved Prescription Drugs with Therapeutic Equivalence Evaluations." The draft list contains some 5,000 drug products which, according to Califano, account for about 75 percent of prescription drugs sold in this country. "The only drugs not on the list," FDA says, "are those which are still . being examined for effectiveness and those which were marketed be:I fore 1938 when FDA first required • proof of safety." Only about 2,000 of the drug products on the list offer therapeutic equivalents, however. Another 2,000 are manufactured under current patents by a single manufacturer. The remaining 1,000 "have not yet been shown to have therapeutic equivalents," according to FDA. To be regarded as therapeutically equivalent, drugs must:
• Contain identical amounts of $1 Million in Grants the same active ingredient; Available for Studies • Be manufactured in an FDAOn Drug Prescribing approved plant; • Meet all quality and purity t - - - - - - - - - - - - - - - - - - 1 standards; Up to $1 million in grants is being • Be adequately labeled; offered by the National Center for • Affect the body in the same Health Services Research (NCHSR) way. to support studies on issues and The proposed FDA list will be cirmethods involved in improving the culated for public comment until quality and ecopomy of drug preApril12. A final list is expected to be scribing. issued by summer. Grant proposals are being invited Several groups, including the from academic institutions, state Pharmaceutical Manufacturers Asand local government agencies, and sociation, have already attacked nonprofit organizations or indiboth the model law and the FDA viduals. list. NCHSR, which has been addressBut American Pharmaceutical Asing a variety of problems associated sociation staff and members have with the delivery of health services worked with both FTC and FDA to in this country, has focused on drug try to insure that both initiatives represcribing because of what it calls fleet the concerns and interests of "a wide range in the quality of drug American pharmacists. prescribing." NCHSR indicates that Also coming later in 1979 is the most of the studies will deal with "Guide to Prescription Drug "the assessment of the the effects of Prices," a new directory listing the various methods designed to imsellers and distributors from which prove drug prescribing." particular drugs can be obtained, All proposals are due to NCHSR and the specific prices they charge, by April1, 1979. Grant awards will Califano said. be made before October 1. Informa"More than 90 percent of the getion on the program may be obneric drug products in this country tained by calling (301) 436-6920 or are produced by the very same com436-6198. o panies that market products under their own brand names," Califano pointed out. "The FDA has concluded that for drugs evaluated as therapeutically equivalent, there is no general difference in quality, safety, or medical . efficacy between brand name drugs and generic drugs. Thus substantial savings to consumers are possible, with no loss in the quality of drugs used." FTC chairman Pertschuk said the government moves will "stimulate an outbreak in competition for both manufacturers and pharmacists." "Business," he said, "often fights 51 Madison Ave. New York, N.Y. competition as vigorously as it 10010 Tel. (212) 683-3089 fights regulation. Robust competi*XIV, 1975. tion is a cure for pernicious regulation. And it can be a prescription to fight inflation as well."
E...,lsity~
WAx,N.F~
COIIIacl Crocla.
-WES
._ Arnerican Pharmacy Voi.NS19, No.3, Mar.1979/ 121
9