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Legislation & Regulation
LEGISLATION & REGULATION
APhA Wary of New Medicare Drug Benefit Proposed legislation that calls for a Medicare drug benefit, although seen as favorable overall, needs a more carefully defined reimbursement plan for pharmacists, according to testimony by the American Pharmaceutical Association (APhA) presented at a June 11 congressional hearing. The hearing was on the Medicare Prescription Drug Act of 1991 (HR 2500), introduced May 30 by Rep. Pete Stark (D-Calif.). The bill echoes provisions of the controversial Medicare Catastrophic Coverage Act of 1988 (MCCA), which was repealed in 1989 after senior citizen groups argued that it made Medicare premiums too expensive. Stark's bill would provide Part B Medicare patients coverage for outpatient prescription drugs after they meet a $650 deductible. Beneficiaries would pay a 20% coinsurance payment, as now required for other Part B Medicare benefits. Unlike MCCA, this bill does not include coverage for home IV drug therapy. The bill would set pharmacy reimbursement at either the 90th percentile of actual drug charges or average wholesale price plus a $5 dispensing fee for participating pharmacies, whichever costs less. Nonparticipating pharmacies would get a $3 fee. At the hearing, APhA Executive Vice President John A. Gans warned that if Stark's proposal is interpreted in the same way that MCCA was in 1988, it would be "catastrophic" for pharmacy. Gans told Stark that similar language contained in MCCA was "manipulated" by the Health Care Financing Administration and could have caused pharmacists to lose about $2 per prescription. "I cannot emphasize strongly enough what an adverse effect the 12
drug benefit would have on pharmacy unless the language is further refined to preclude a similar situation from occurring," he said. He also stressed that it is "critically important that the drug-benefit-payment mechanism be structured to provide fair, incentive-based reimbursement" to encourage pharmacist participation and ensure that beneficiaries have access to pharmaceutical services and products. Gans asked Congress to understand ''how pharmacists have been caught in the middle of forces that are not within their control and that have made the question of survival an everyday reality." Gans explained that while drug manufacturers have increased prices, third party programs-including Medicare-have put restrictions on pharmacists' reimbursement. "If Medicare were to fail to address this problem," Gans said, "the results would indeed be catastrophic for pharmacy" because the Medicare population is simply too large a share of the market for pharmacists to absorb the loss. Gans said a "reasonable interpretation" of HR 2500's payment provisions would provide adequate reimbursement for pharmacists. Because of the similarity between HR 2500 and the doomed MCCA, many on Capitol Hill say they don't expect the bill to receive serious consideration. However, pharmacy obseryers say the bill is significant because it keeps the issue of prescription drug reimbursement at the forefront of Congress's agenda.
CPMS Unlawful, FTC Says Confirming the position of many who opposed the Clozaril Patient Monitoring System (CPMS), staff at the Federal Trade Commission
(FTC) have charged Sandoz Pharmaceuticals with "unlawfully requiring those who purchased its antischizophrenic drug clozapine (Clozaril) to buy distribution and patient monitoring services arranged by Sandoz as well." In a draft complaint, FTC said that the drug's distribution system restrained competition and increased the price of the drug and that through CPMS Sandoz intended "to increase its profits and to deter generic pharmaceutical manufacturers from entering the market after Sandoz's period of exclusivity expired" in 1994. FTC's complaints, as well as a proposed consent agreement, were published in the July 3 Federal Register. Under the consent agreement, Sandoz would be prohibited from requiring any purchaser of clozapine to buy other goods or services from Sandoz or anyone designated by Sandoz. While Sandoz recently announced it would no longer require patients to sign up with CPMS to obtain the drug, FTC's order would be binding, and violations of the order could result in civil penalties of up to $10,000 a day for each violation. There is a 60-day public comment period for this consent agreement, after which FTC commissioners will decide whether to make it final. If the agreement becomes final, FTC's draft complaint will not be filed in court. FTC's complaint has no effect on a suit against Sandoz filed by more than 30 states, which also claims that CPMS violated antitrust laws. Everyone wins when you talk ... You & Your PharmacistCommunicate for Good Health ........................................................ National Pharmacy Week October 20-26, 1991
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American Pharmacy, Vol. NS31, No.9 September 19911620
APhA Wary of New Medicare Drug Benefit Proposed legislation that calls for a Medicare drug benefit, although seen as favorable overall, needs a more carefully defined reimbursement plan for pharmacists, according to testimony by the American Pharmaceutical Association (APhA) presented at a June 11 congressional hearing. The hearing was on the Medicare Prescription Drug Act of 1991 (HR 2500), introduced May 30 by Rep. Pete Stark (D-Calif.). The bill echoes provisions of the controversial Medicare Catastrophic Coverage Act of 1988 (MCCA), which was repealed in 1989 after senior citizen groups argued that it made Medicare premiums too expensive. Stark's bill would provide Part B Medicare patients coverage for outpatient prescription drugs after they meet a $650 deductible. Beneficiaries would pay a 20% coinsurance payment, as now required for other Part B Medicare benefits. Unlike MCCA, this bill does not include coverage for home IV drug therapy. The bill would set pharmacy reimbursement at either the 90th percentile of actual drug charges or average wholesale price plus a $5 dispensing fee for participating pharmacies, whichever costs less. Nonparticipating pharmacies would get a $3 fee. At the hearing, APhA Executive Vice President John A. Gans warned that if Stark's proposal is interpreted in the same way that MCCA was in 1988, it would be "catastrophic" for pharmacy. Gans told Stark that similar language contained in MCCA was "manipulated" by the Health Care Financing Administration and could have caused pharmacists to lose about $2 per prescription. "I cannot emphasize strongly enough what an adverse effect the 12
drug benefit would have on pharmacy unless the language is further refined to preclude a similar situation from occurring," he said. He also stressed that it is "critically important that the drug-benefit-payment mechanism be structured to provide fair, incentive-based reimbursement" to encourage pharmacist participation and ensure that beneficiaries have access to pharmaceutical services and products. Gans asked Congress to understand ''how pharmacists have been caught in the middle of forces that are not within their control and that have made the question of survival an everyday reality." Gans explained that while drug manufacturers have increased prices, third party programs-including Medicare-have put restrictions on pharmacists' reimbursement. "If Medicare were to fail to address this problem," Gans said, "the results would indeed be catastrophic for pharmacy" because the Medicare population is simply too large a share of the market for pharmacists to absorb the loss. Gans said a "reasonable interpretation" of HR 2500's payment provisions would provide adequate reimbursement for pharmacists. Because of the similarity between HR 2500 and the doomed MCCA, many on Capitol Hill say they don't expect the bill to receive serious consideration. However, pharmacy obseryers say the bill is significant because it keeps the issue of prescription drug reimbursement at the forefront of Congress's agenda.
CPMS Unlawful, FTC Says Confirming the position of many who opposed the Clozaril Patient Monitoring System (CPMS), staff at the Federal Trade Commission
(FTC) have charged Sandoz Pharmaceuticals with "unlawfully requiring those who purchased its antischizophrenic drug clozapine (Clozaril) to buy distribution and patient monitoring services arranged by Sandoz as well." In a draft complaint, FTC said that the drug's distribution system restrained competition and increased the price of the drug and that through CPMS Sandoz intended "to increase its profits and to deter generic pharmaceutical manufacturers from entering the market after Sandoz's period of exclusivity expired" in 1994. FTC's complaints, as well as a proposed consent agreement, were published in the July 3 Federal Register. Under the consent agreement, Sandoz would be prohibited from requiring any purchaser of clozapine to buy other goods or services from Sandoz or anyone designated by Sandoz. While Sandoz recently announced it would no longer require patients to sign up with CPMS to obtain the drug, FTC's order would be binding, and violations of the order could result in civil penalties of up to $10,000 a day for each violation. There is a 60-day public comment period for this consent agreement, after which FTC commissioners will decide whether to make it final. If the agreement becomes final, FTC's draft complaint will not be filed in court. FTC's complaint has no effect on a suit against Sandoz filed by more than 30 states, which also claims that CPMS violated antitrust laws. Everyone wins when you talk ... You & Your PharmacistCommunicate for Good Health ........................................................ National Pharmacy Week October 20-26, 1991
M
American Pharmacy, Vol. NS31, No.9 September 19911620