Chains urge OIG to withdraw report on brand drug costs


A U. of Texas study charges that OIG report on Medicaid pharmacy acquisition cost for brand drugs is flawed. NACDS and NCPA urge OIG to withdraw its document



Chains urge OIG to withdraw report on brand drug costs

Still sparring with President Bush over his discount card proposal, the National Association of Chain Drug Stores is taking on another challenge. In NACDS' crosshairs is the Office of Inspector General's August 2001 report on Medicaid pharmacy acquisition cost for brand-name drugs.

The OIG report concluded that there's a significant difference between pharmacy acquisition cost for brand-name drugs and average wholesale price. Nationally, pharmacy acquisition cost was an average of 21.8% below AWP. This means, based on the 200 brand-name drugs with the greatest amount of Medicaid reimbursement for 1999, states could have saved as much as $1.08 billion if reimbursement had been pegged to a 21.8% average discount below AWP, OIG claimed.

NACDS and the National Community Pharmacists Association called the OIG report "seriously flawed." They used as their defense a new analysis of the OIG report from The University of Texas Center for Pharmacoeconomic Studies. The Texas study found many problems with the OIG methodology, from inaccurate sampling of Medicaid pharmacy providers to the use of off-patent brands in their analysis.

Armed with these findings, NACDS and NCPA have asked OIG to withdraw its report. The associations are also mindful that OIG will be issuing another cost report shortly—this time on generic drugs. They're afraid that if the generic report uses the same methodology as the brand version, it, too, will not be reflective of the marketplace.

The release of the Texas study was one of the highlights of a press conference called by NACDS in New York City last month. Other issues discussed included the following:

• Craig Fuller, NACDS president and CEO, said he was pleased 2001 ended as it began, without a Medicare-endorsed drug discount card program. He said NACDS is now included in discussions on Capitol Hill, but access does not mean agreement. The association is looking at some new options for 2002, but he would not elaborate on what they are. Chiming in, Alan Levin, outgoing chairman of NACDS, underscored that whatever plan is offered must be comprehensive, should not favor one company over another, and ought not require seniors to have to carry 10 drug cards in their wallets.

• NACDS and NCPA should have a CEO in place for SureScript, the network they formed in response to RxHub, by the end of January. In addition, they will select a technology partner to develop a pilot project on e-prescribing in the first quarter.

• Despite a weak economy, chain drugstores chalked up a 10.3% rise in sales in September, versus only a 2.5% increase for retailing overall. This shows that chain drugstores are still the "most resilient" of all retail trade, Levin declared. He believes chain pharmacy is a good business to be in because drugs are a necessity, Americans trust pharmacists, and pharmacies are convenient places to shop.

• Close to 40 major suppliers have signed up with, NACDS' on-line communications network, Fuller reported. Two new features are Merchandising Calendars, which allow users to view promotional events across manufacturers in a monthly format, and Email Alerts, which are messages about products from recalls to launches.

• Many large chains have appointed a privacy officer to help them comply with the Health Insurance Portability & Accountability Act (HIPAA). Thanks to a bill, which NACDS members supported and President Bush is expected to sign, the deadline for meeting HIPAA's claim transaction standards will be delayed by a year to Oct. 16, 2003.

• The title of NACDS chairman passed from Levin to Mark Griffin, president and CEO of Lewis Drugs. Griffin told the audience that patients frequently turn to pharmacists to meet their healthcare needs, but that pharmacists are also the least appreciated. He stressed that the word needs to get out about the value of pharmacists.

Judy Chi


Judy Chi. Chains urge OIG to withdraw report on brand drug costs. Drug Topics 2002;1:13.

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