States put obstacles on 'level playing field.'

Drug Store News, Jan 3, 1994 by Ken Rankin

Despite pledges by health reformers to curb discriminatory pharmaceutical pricing practices against retail drug stores, don't count on Washington to level the playing field.

Given the Clinton Administration's recent approval of Tennessee's scheme to convert its Medicaid program to a system of managed care organizations, drug stores in some parts of the country may have trouble finding any playing field at all!

Indeed, the real decisions on retail pharmacy's role under health reform--the ones that drug chains and independents will have to live with well into the next century--are being made right now at the state level.

Perhaps the most immediate threat facing community pharmacy on this front is the danger that state Medicaid administrators will seek waivers from Washington to establish Tennessee-style managed care systems under which retail drug stores will be at a severe competitive disadvantage.

Legislative strategists at both NACDS and NARD recognize this danger and are mapping out a campaign to address it. At a recent state issues summit conference co-sponsored by the two organizations, representatives of state pharmacy associations and chain drug committees from state retail groups met together to decide a plan of attack.

The most pressing objective is to educate Medicaid administrators and other state officials on the value of ensuring coverage for pharmacy services--not merely prescription drug benefits.

Assuring community pharmacy a seat at the health reform table would be a hollow victory, however, if the drug pricing deck remains stacked against them.

To guarantee drug stores a square deal in the health reform game, NACDS and NARD will spend much of the next six months urging state legislatures to enact newly drafted model legislation to prevent price discrimination.

Under the model law supported by both chains and independents, pharmaceutical manufacturers will be strictly forbidden from offering any class of trade discounts to purchasers.

All manufacturer drug price discounts, as well as all rebates, samples, deals or trade concessions on pharmaceutical products, would have to be offered to all pharmacies on proportionally equal terms.

Pharmaceutical manufacturers would be allowed to continue offering some discounts under the model legislation, including those reflecting prompt payment or volume buying practices that create economies or efficiencies for the manufacturer.

Although drug manufacturers would also be allowed to offer discounts that reward the use of formularies or managed care-style programs to influence physician prescribing practices, such discounts would have to be proportional to the benefits realized by the manufacturer, and made available equally to pharmacies-including retail drug stores.