SECTION: CAPITOL HILL HEARING TESTIMONY

LENGTH: 1859 words

COMMITTEE: HOUSE ENERGY AND COMMERCE

SUBCOMMITTEE: HEALTH

HEADLINE: PRESCRIPTION DRUG BENEFIT

BILL-NO:  
H.R. 3626             Retrieve Bill Tracking Report
                      Retrieve Full Text of Bill

TESTIMONY-BY: MR. CRAIG FULLER, PRESIDENT AND CEO

AFFILIATION: NATIONAL ASSOCIATION OF CHAIN DRUG STORES

BODY:
Testimony The Committee on House Energy and Commerce Subcommittee Health W.J. "Billy" Tauzin, Chairman

Creating a Medicare Prescription Drug Benefit: Assessing Efforts to Help America's Low-Income Seniors Subcommittee on Health

April 17, 2002

Mr. Craig Fuller President and CEO National Association of Chain Drug Stores

Mr. Chairman and Members of the Subcommittee, I am Craig Fuller, President and CEO of the National Association of Chain Drug Stores (NACDS). NACDS represents about 200 chain pharmacy companies that operate about 34,000 retail pharmacies all across the United States.

Chain pharmacy is the single largest segment of pharmacy practice. Our members include the traditional chain pharmacies, the food/pharmacy combinations, and the mass merchandise pharmacy operations. We filled about 70 percent of the 3.1 billion prescriptions provided across the nation last year. We appreciate the opportunity to describe for you our ideas on both interim steps that the Congress can take to help seniors obtain necessary medications, as well providing a comprehensive Medicare prescription drug benefit. Interim Approaches to Pharmacy Coverage

First, let me talk about interim steps that we encourage Congress to take if a comprehensive drug benefit is not achievable this year. If we cannot come to agreement, or insufficient time exists to develop a voluntary benefit for all seniors, then we think we should start with making medications more accessible for the most vulnerable in society, and those with the highest medication bills.

Consolidated Manufacturer Card Program with "Stop Loss" Coverage: NACDS supports an interim approach that would have two components. The first component would create the necessary Federal infrastructure for low-income seniors to more easily access the various drug manufacturer medication subsidy and discount programs that are being developed. The second component would provide a full pharmacy benefit for seniors who need "stop loss" coverage because they have high out of pocket drug costs.

First, let me talk about our ideas on the manufacturer-based programs. At last count, nine manufacturers have developed these programs over the past few months. Some of these programs provide discounts, while others provide subsidies, such as paying the full cost of the prescription other than a $12 or $15 co-pay.

However, each program has been issuing its own "card" to seniors to access these discounts and subsidies at the pharmacy. Moreover, each program has different eligibility criteria and enrollment forms, and other requirements to access the program. While NACDS views these programs as very worthy, we are concerned that seniors will be confused by the multiple programs, and that they will create operational difficulties for pharmacies having to deal with multiple cards for seniors.

As a result, NACDS announced last month that it was launching the Pharmacy Care Alliance, which represents a strong first step by retail pharmacy leaders to help seniors obtain needed prescription drugs. Among other activities, the Alliance will help educate seniors about these programs so that they can be used to the maximum extent possible.

We have also created the PharmacyCareOneCard-a new concept that would allow low-income seniors to carry a single card for participating in a broad number of these manufacturers' discount and subsidy programs. We hope all pharmaceutical manufacturers that sponsor special programs for seniors -whether they maintain their own card program or not-will become partners in the Alliance and offer their programs to a national network of retail pharmacies through the PharmacyCareOneCard. We hope to build an open, flexible program that allows individual manufacturers and retailers to choose whether and how to participate.

We already have seen results from our efforts to push for a consolidated approach. Over the last few days, several manufacturers have responded to our call for a "one card", and have joined forces to create the "Together Rx" program, which would allow seniors to access these manufacturers' discount programs through the use of one card. We are hopeful that this card program might eventually be joined with our program - as well as other manufacturer card programs that exist in the market - to offer these programs to seniors through the use of a true, single standard card.

While the "Together Rx" card clearly moves in the right direction, we believe that legislation is needed to facilitate the evolution of the goal of creating one card, and making the program more permanent for seniors. We believe that Federal legislation should be enacted to create a single administrative structure that can be used by any manufacturer that wants to offer a discount or subsidy program. Seniors would be able to use one card at the pharmacy - rather than multiple cards - to obtain lower medication prices.

Quality of care would also be enhanced, since a single electronic prescription processing system would allow the pharmacist to check for any potential adverse reactions in filling prescriptions for seniors. This could not be achievable without a Federal solution. Our hope is that all manufacturers with these programs would use this approach to offering their discounts and subsidies.

Second, as part of our interim proposal, we would support full pharmacy "stop loss" coverage for seniors who incur more than a certain amount in unreimbursed drug expenses each year, such as $6,000. The same infrastructure that is used to administer the manufacturer subsidy and discount programs can be used to implement this "stop loss" coverage program. Offering this coverage will start us down the road to providing more comprehensive coverage for prescription drugs, beginning with the population that needs help the most. Over time, Congress can take steps to lower the "stop loss" amount so that more seniors become eligible for coverage. But, at least we've been able to take the first step this year.

Medicare-Endorsed Discount Card: Before turning to comprehensive approaches to pharmacy coverage, I should share with you that we continue to oppose the Administration's efforts to establish a Medicare-endorsed prescription drug discount program. The Bush Administration does, however, deserve credit for starting last year a serious examination of innovative private approaches that can provide meaningful pharmacy benefits to low-income seniors. However, their program will not result in meaningful reductions in the price of prescription medicines for seniors. Moreover, any reductions will likely just come from reduced pharmacy prices, and not a reduction in the price of the medication from the drug manufacturer. This debate was moved forward in very productive ways with the result that many manufacturers are now offering meaningful price reductions on the cost of their medications.

In addition, we don't think that HHS should be picking winners and losers in this market through their endorsement program, or that its appropriate to lend Medicare's time-trusted name to private-sector entities without strict standards. Finally, we do not believe that the Department has the legislative authority to develop this program, not do we support Congress giving it to them as an interim measure.

Comprehensive Approaches to Pharmacy Coverage

Now, let me turn my attention to our ideas for comprehensive pharmacy coverage. NACDS supports enactment of a comprehensive pharmacy benefit for seniors. In particular, we strongly support H.R. 3626, the Medicare Drug and Service Coverage Act of 2002, which has been introduced by Representatives Jo Ann Emerson and Mike Ross. This is the only comprehensive bipartisan prescription drug bill that has been introduced in the House, and contains the many elements that we think are important in a meaningful, quality drug benefit for seniors.

This includes ensuring that seniors have access to the pharmacy of their choice, that they are provided with community-based pharmacy services with provisions for adequate payment for these services, and that the use of low-cost generic drugs is encouraged. We are grateful to these two members for their leadership on this issue, and we also appreciate the cosponsorship of the Members of Congress that support this bill. This bill is supported not only by NACDS, but the entire pharmacy community, including the independent pharmacies, hospital pharmacies, and nursing home pharmacies.

In terms of the recent drug benefit proposal that passed the House in June 2000, HR 4680 - the Medicare Rx Act - you should know that NACDS and all of organized pharmacy is concerned with the approach used in that bill. I believe we would have similar concerns with that type of bill if it were brought to the House floor again this year. In general, we have concerns with "drugs- only" insurance-based and PBM-based approaches to providing prescription drug benefits. We do not support the approaches used by these entities to contain costs, because they are primarily focused on reducing access to prescription medications, and reducing pharmacy reimbursement. Moreover, we also do not believe that the Medicare program needs to turn to these middlemen to obtain the savings on medications that Medicare should obtain, given its purchasing power in the market.

We believe that the experience of the government's own FEHBP should be instructive to Members of Congress as they consider the true effectiveness of this approach to providing a prescription drug benefit for seniors. Our analysis indicates that escalating prescription drug spending in the FEHBP program - which is administered by the same PBMs that would be used for Medicare - has contributed significantly in recent years to the sharp premium increases seen in the program.

For example, in 2001, 40 percent of the 10.5 percent increase in FEHBP premiums was attributable to drug spending increases. In 2002, 37 percent of the 13.3 percent increase in FEHBP premiums was attributable to drug spending increases.

Keep in mind that the FEHBP population is not typical of the traditional older Medicare population, which uses more drugs and has higher per capita expenditures than the much-younger FEHBP population. If the PBMs have not been able to manage prescription drug spending in the FEHBP program, why should we believe that they would be any more effective in the higher-cost Medicare population?

Conclusion

Mr. Chairman, NACDS wants to be constructive players in the debate on both interim and comprehensive solutions to pharmacy coverage for seniors. Our industry is an important player in this debate, because we are the primary vehicle by which pharmacy services are actually delivered to the patient. We operate an efficient, low-margin, but highly effective primary health care delivery system that is accessible in many places 24-hours a day, 7-days a week.

We look forward to working with you and members of the Committee in making this happen now and in the future. Thank you again for the opportunity to be here today.



LOAD-DATE: May 8, 2002