Magazine article Drug Topics

House Committee Chairman Slams 'Flawed' Rx Pricing

Magazine article Drug Topics

House Committee Chairman Slams 'Flawed' Rx Pricing

Article excerpt

Price manipulation by some drug firms is endangering public health and costing Medicare billions of dollars a year, according to a Congressional investigation. Rep. Thomas J. Bliley Jr., chairman of the House Commerce Committee, said the scheme involves reporting inflated average wholesale price figures on which reimbursements are based. Then, the manufacturers sell to physicians the approximately 50 prescription drugs Medicare covers for outpatients at a fraction of the AWE That creates a "spread" that could be worth hundreds of dollars for a single Rx to the M.D.s.

"The creation of these spreads has the direct effect of inflating the price Medicare and its beneficiaries have to pay for these drugs," Bliley wrote to Alan E Holmer, president of the Pharmaceutical Research & Manufacturers of America. "Such incentives also may be harming the integrity of certain medical judgments, influencing drug utilization decisions by health-care providers in ways that may not be in the best interest of patients."

Medicare reimburses at 95% of -AWP for the infusion, inhalation, and injectable Rxs that cannot be self-administered. Patients are responsible for a 20% co-pay

Bliley said his staff's 18-month investigation, which included a review of almost 100,000 pages of internal documents, "cumulatively demonstrates that the current reimbursement methodology for Medicarecovered drugs and HCFA's [Health Care Financing Administration's] oversight of that program are so deeply flawed that they invite rampant abuse." It allows Rx makers "to essentially determine, as part of their sales and marketing strategies, how much particular health-care provider groups will be reimbursed under Medicare."

Telling Holmer he was "outraged," Bliley demanded "that your association take a strong stand against these abusive practices and that you urge your member companies to immediately terminate this abuse of the Medicare system and its vulnerable beneficiaries." Bliley, a Virginia Republican who is retiring at the end of this Congress after seven terms, suggested that manufacturers might be required to report pricing information directly to HCFA and made subject to criminal penalties for false statements if voluntary reforms are not forthcoming. Currently, manufacturers provide AWP information to pricing guides, such as First DataBank Inc. …

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