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Chains lobby on drug benefit
Associated
Press via the
Baltimore
Sun
October 21, 2003
Wal-Mart,
others see threat from Medicare bill; They fear being shut out; Mail-order
services' role called conflict of interest
The nation's drugstores and
supermarkets are engaged in a furious lobbying campaign to limit the
influence of rivals likely to play a prominent role in a prescription drug
benefit for Medicare recipients.
The big chains say the growing mail-order services owned by pharmacy
benefit managers pose a threat to retailers. They fear being shut out of
the market if the managers administer the benefit under Medicare and also
sell drugs by mail order.
House and Senate conferees are trying to reconcile two Medicare bills,
both of which propose providing billions a year in drug prescription
coverage for the poorest among the elderly and disabled.
Efforts to forge a compromise between the House and Senate Medicare bills
have been sluggish, although the pace has picked up in recent days.
The prospect that lawmakers might produce legislation in coming weeks has
given new urgency to the lobbying effort.
Wal-Mart, Walgreens, Giant Food, Kroger Co. and other sellers of
prescription drugs wrote House Speaker J. Dennis Hastert, calling the dual
role by pharmacy benefit managers a conflict of interest.
A benefits manager "that owns or operates a mail-order pharmacy has
an incentive to direct prescriptions through their mail-order
pharmacy," the companies said.
Their letter pointed to a recent study that found "self-dealing"
would cost taxpayers and the elderly between $14.5 billion and $29 billion
over 10 years.
Congress has prohibited doctors who participate in government health
programs from directing business to companies in which they have a
financial interest. The pharmacies and their allies want a similar
provision in the Medicare bill for pharmacy benefit managers.
Arkansas Rep. John Boozman, a Republican whose district includes
Wal-Mart's headquarters, said, "The self-dealing by the [pharmacy
benefit managers] means higher costs. I think just common sense tells us
that. How can you strike the best deal when you're dealing with
yourself?"
The retailers also seek to reinforce their position by noting government
allegations that Medco Health Solutions Inc., the largest pharmacy
benefit-management company, pressured doctors into switching patients to
medications made by its former owner, pharmaceutical giant Merck & Co.
Ban said to lack
support
Sen. John B. Breaux of
Louisiana
, a Democratic member of the House-Senate
conference committee, said he does not think there is support for barring
managers from the mail-order business. He said the issue has yet to be
addressed by conference committee members.
Pharmacy benefit managers have a ready answer to their opponents' claims
in a study by Congress' investigative arm of their performance in
administering drug coverage for federal employees.
The General Accounting Office said benefit managers saved money for the
Federal Employees Health Benefits Program by "obtaining drug price
discounts from retail pharmacies and dispensing drugs at lower costs
through their mail-order pharmacies."
Chain drugstores and independent pharmacists disputed the GAO's findings.
Phil Blando, a spokesman for the Pharmaceutical Care Management
Association, the pharmacy benefit managers' trade association, said stores
"are losing business to the mail-order [sector] because people want
cheaper alternatives."
The battle between retail pharmacies and benefit managers has raged for
years.
Two lawsuits
This month, two lawsuits filed in
Alabama
by independent pharmacies alleged
"anti-competitive practices" against small pharmacies.
The suit names Medco, Caremark Rx Inc., Express Scripts Inc. and
AdvancePCS Inc. as defendants.
Medco is the largest pharmacy benefit manager in the
United States
, followed by AdvancePCS, Express Scripts and
Caremark RX Inc.
Caremark plans to acquire Advance PCS in a $5 billion-plus deal that would
make it the No. 2 pharmacy benefit manager, with annual revenues of $23
billion.
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