The debate over discounted drug prices is getting louder and more muddled each day.
As MODERN HEALTHCARE reported last year, a provision in President Clinton's healthcare reform plan says drug companies must offer the same prices to buyers that meet the same terms. Otherwise, they can't serve Medicare patients under the proposed outpatient drug benefit (Nov. 29, 1993, p. 16).
Sounds simple. The problem is, it's not. Witness competing advertisements recently run by groups with a lot to lose and a lot to win: retail pharmacies, hospitals and HMOs.
To give an idea of the stakes involved, hospitals spent $10 billion on drugs in 1993. Retail pharmacies, HMOs and other providers of outpatient drugs spent about $40 billion.
Hospitals and HMOs see the reform provision as a threat to the discounts they now command-about 25% off prices charged to buyers such as retail pharmacies. They deserve better prices, they say, partly because they influence drug use through formularies. And they argue that drugmakers will trim discounts to hospitals if the law forces them to offer the same discounts to retailers without the return.
Retailers say this won't happen. The provision merely blocks manufacturers from charging them higher prices without justification, they contend. They challenged some popular arguments earlier this month in a two-page advertisement published in Roll Call, a Washington newspaper that covers events on Capitol Hill.
The hardest task is getting lawmakers to understand the issue. "It is so Byzantine; it is so complicated," said Robert Betz, a lobbyist for the Health Industry Group Purchasing Association. "You're talking about economics and theory. And most members of Congress have no idea how hospitals purchase drugs."
Retail pharmacies began their campaign early. The National Association of Chain Drug Stores supported the Clinton plan from the get-go. Its members and members of its ally, the National Association of Retail Druggists, are giving out literature to customers endorsing the Medicare drug benefit. The provision regarding drug discounts is part of the drug benefit.
Meanwhile, hospital alliances are asking pharmacists and executives to write influential lawmakers. A coalition of hospital alliances, HMOs and industry groups such as HIGPA ran a "dear congressman" letter in the Washington Post last month.
Hospitals say they expect their campaign to pay off soon. "We are very close to defeating this provision in the House, and there is significant opposition in the Senate," Mr. Betz said.
The battle, however, will continue on another field. Retailers have filed dozens of lawsuits charging drug companies with price discrimination. A trial on the consolidated lawsuits is scheduled for February 1996 in federal court in Harrisburg, Pa.