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STATEMENT OF JOHN M. RECTOR, VICE PRESIDENT OF GOVERNMENT
AFFAIRS AND GENERAL COUNSEL, NATIONAL ASSOCIATION OF RETAIL DRUGGISTS
Mr. Chairman, Members of the Subcommittee:
I am John M. Rector.
I serve as Vice President of Government Affairs
and General Counsel for the National Association of Retail Druggists.
The National Association of Retail Druggists (NARD) represents the
owners of 40,000 independent pharmacies, where over 75,000 pharmacists dispense more than 70 percent of the nation's prescription drugs.
Together, they serve 18 million persons daily and provide nearly 85 percent of the Medicaid pharmaceutical services. NARD has long been
acknowledged as the sole advocate for this vital component of the free
We appreciate the opportunity to conment on HHS priorities for Fiscal
Our principal concerns relate to the Medicare and Medicaid
programs administered by the Health Care Financing Administration (HCFA)
and the Food and Drug Administration (FDA).
We strongly supported the enactment of the "Medicaid
Anti-Discriminatory Price and Patient Benefit Restoration Act of 1990" (MADPA) in OBRA 90. Since 1985, all HCFA efforts to ostensibly control
escalating drug costs have either unfairly reduced provider reimbursement
or limited Medicaid patient access to full coverage.
These initiatives have had virtually no effect on the record breaking
increases in drug prices which now account for 80% of program costs.
was a program with first-class prices and second-class care.
The Medicaid outpatient drug program, as the largest nonprofit, now has equal access to nonprofit prices. With several important exceptions
it appears that HCFA is implementing MADPA in a reasonable manner.
short order, the rebate or "best price" contracts were developed, and
virtually all pharmaceutical corporations are participating.
Same states failed to provide our members, reasonable notice of the
04-01-91 list of covered products. It is our view these pharmacists
should be held harmless and that a portion of the special 75% match for
the first year of MADPA or a portion of the rebates be made available for
It is doubtful that in the future quarters the problem will
be as extensive as in the first one, but a minimum of two weeks actual
notice in our view would be reasonable.
The MADPA requires a number of studies on the subject of
pharmaceutical pricing, including a controller General study due each year
on May Ist to inform the Congress about price changes. Repeatedly,
investigative inquiries including those by Chaimmen Pryor, Dingell and
Brooks have been denied this information. Now it will be available for
the Subconmittee and others. Thus any allegations about pricing based on
aneodotal information, half-truths, pseudo-facts, wishful thinking or
outright distortions by opponents of equal access to fair pricing, should
be readily disregarded.
Some have claimed that special prices for charities have been
We hope not. Claims have also been made that "commercial
nonprofits" or those serving virtually no indigents may have experienced price increases comparable to the double digit increases our members
receive each January. We welcome a more level playing field for such
Lastly, hospital pharmacists and consultant pharmacists seem to
point to a conspiracy by the pharmaceutical industry to fix prices as a
consequence of MADPA. To the extent this can be documented, the Justice
Department should appropriately address these charges.
By and large, the new moratorium on reductions in pharmacy reimbursement, through December 1994, by either Federal or state Medicaid
agencies, as of the date of OBRA 90 enactment, November 5, 1990, is being
implemented. Unfortunately, several states have attempted to reduce
reimbursement after November 5, 1990 and such acts are now the subject of
law suits filed in various Federal courts. These states are, New York
(03-31-91), Missouri (03-13-91), Pennsylvania (03-19-91), and california
(03-22-91). A TRO has been granted in the Missouri case.
including Tennessee and Kentucky initially claimed that HCFA was forcing them to expost facto reduce pharmacy reimbursement. This is clearly not
Tennessee has withdrawn its initiative and Kentucky may be the
subject of litigation. Importantly, HCFA is abusing West Virginia pharmacists by claiming in a December 31, 1990 letter to the Department of
Human Services, that the state was out of compliance. Actually there was no notice or finding of noncompliance in West Virginia or the other cited
states prior to November 5, 1990 or for that matter by January 1, 1991.
We are especially concerned about such lawlessness in these few states,
Fortunately, it appears that most states have complied with the Federal
Much progress has been made towards the enactment of marketplace
pricing (MAPP) reimbursement for retail pharmacists participating in the
Medicaid outpatient prescription drug program. This concept developed by
our organization was formally submitted to HHS in 1983 and has been
endorsed since 1986 even by the Pharmaceutical Manufacturers Association. Had the Medicare catastrophic program not been repealed it would have been
the reimbursement standard by 1991.
And of course, MAPP was included in
the bipartisan "Pharmaceutical Access and Prudent Purchasing Act of 1990."
S. 2605, PAPPA, last year.
Now that MADPA has focused HCFA on the source of prescription drug
pricing increases the moratorium period should be more than adequate to
enact a this fair reimbursement formula. The MAPP approach reimburses the
pharmacists as any other small business person would be reimbursed but
also provides payment for professional services. In effect, it is payment for a "pharmacy visit" somewhat like an office visit for a physician. Of
course, there are appropriate screens including the "lower of" provisions
which will continue to provide Medicaid the benefits of our very
competitive retail marketplace.
1. The President's Medicare HME cuts are not only unnecessary but
may precipitate a crisis in the delivery of such products and related
services to Medicare beneficiaries.
As a member of the Coalition to support quality Home Medical
Equipment, Supplies and Services (the Home Care Coalition,) made up of
consumer, health care professionals and supplier organizations, we concur
with the coalition's position that the "further reductions such as recently proposed by the Administration should be rejected."
2. Regarding the OBRA 89 provisions for mandatory submission of Part
B Medicare claims we concur with HCFA reconmendations that exemptions be
provided for claims for items below a certain dollar threshold, for
example $100.00 dollars. And that a blanket exemption be provided for
entities not primarily involved with such health care services.
3. We recommend that HHS/HCFA carefully monitor the practices of Medicare funded entities including hospitals, to assure that such Federal
funds are not facilitating a denial of Medicare beneficiaries freedom of
choice as recently addressed in the Key Enterprises of Delaware, Inc. V.
We are very concerned abou
failure of the FDA to implement the
Prescription Drug Marketing Act, POMA, (P.L. 100-293.) This land.nark
statute, authored by our dear friend the late Senator Spark Matsinaga and
Chairman Jahn Dingell of the House Energy and Commerce Committee, was the
result of an extensive four year investigation and its provisions are
aimed at the safety of American consumers and fair competition in the
pharmaceutical marketplace. To date, the FDA has done little to increase
the risk to violators. Additionally, it appears that HHS has undermined the efforts of its Inspector General to assist in the development of
appropriate PDMA cases. Rather than a separate additional appropriation for a modest level of enforcement, we suggest that some small portion of
the Bush requested FDA user fees be set aside for appropriate
investigation and prosecution activities.
2. NARD has long maintained that all FDA approved drugs should be
available to all pharmacists. The FDA should be carefully monitored to
assure that in the future it rejects drug distribution plans that exclude
virtually all of the nation's pharmacists. This dangerous precedent was
incorporated in the marketing of clozaril. Fortunately in the new
marketing of clozaril patients are generally not denied the important
professional services provided by their family pharmacists.
We request that the Subcommittee support our efforts to dissuade
the FDA from steering American consumers to our commercial nonprofit
competitors. FDA has no business recommending one competitor versus
another in the prescription drug marketplace. We are especially
concerned by the FDA's endorsement of mail order pharmacy which forces
American consumers to forgo traditionally pharmacy services. In any case, no competitor should be "FDA Approved" to the disadvantage of
The FDA's image should be beyond approach. Certainly, the
general drug scandal has tarnished the view of the Agency in marry
sectors. The Agency's obligations to American consumers are enormous. The distribution system for prescription drugs in this country in
PRACTICING PHARMACISTS ADVISORY COUNCIL
Given the extensive struggle throughout the eighties regarding
matters of pharmacy reimbursement both in the Medicaid outpatient
prescription drug program and the Medicare home medical equipment, supplies and services program, the establishment of a practicing
Pharmacists Advisory Council, similar to the Council for practicing Physicians, established by Section 1868 of Title XVIII of the Social Security Act, would be both timely and sensible. The practicing Pharmacists Advisory Council could help assure that the Department has the views of pharmacists participating in the Medicaid and Medicare programs long before political and legislative controversies polarize the