1999CRE2129 VA PRESCRIPTION DRUG BENEFIT IN PERIL
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[Congressional Record: October 19, 1999 (Extensions)]
[Page E2129]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]
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VA PRESCRIPTION DRUG BENEFIT IN PERIL
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HON. CLIFF STEARNS
of florida
in the house of representatives
Tuesday, October 19, 1999
Mr. STEARNS. Mr. Speaker, I rise to share with you my concern with a
letter I recently received from the Department of Veterans Affairs. As
Chair of the Subcommittee on Health of the Committee of Veterans'
Affairs, I am deeply concerned by any action that threatens the well-
being of those Americans who have laid their lives on the line for our
country.
I know that many of my colleagues have signed on to a bill that
promises to help senior citizens better afford their medicines. I refer
to H.R. 664, which would extend favorable government prices for
prescription drugs to retail pharmacies serving the Medicare
population. Although this may sound like a win-win proposition, there
would be some very big losers, namely, the nation's veterans.
The letter I received from Thomas L. Garthwaite, M.D., Acting Under
Secretary for Health of the Veterans Administration reads, in part: We
believe enactment of H.R. 664 would increase VA's annual pharmaceutical
costs by $500 to $600 million.
This could put the health of millions of veterans at risk because the
VA would have to make up for those increased expenditures either by
denying veterans needed medicines or by cutting back on other health
care services. Our veterans deserve better than that.
The purpose of this speech is not to pit veterans against seniors.
Rather, it's to suggest that H.R. 664 is not the way to help either of
these groups. It would extend price controls to more than 40 percent of
the pharmaceutical marketplace. And price controls, throughout their
long and dismal history, have never solved anything. Instead, they've
created shortages, delays and rationing, which we simply can't afford
in health care.
We owe a debt to veterans and I intend to see that the debt is paid
in full. We also have an obligation to help senior citizens gain better
access to the benefits of modern medicines. Seniors deserve more from
their Members of Congress than the false promise of cheap drugs through
price controls. In a word, they deserve coverage. We need to roll up
our sleeves and get to work on legislation that would expand coverage
options for seniors while protecting the well-earned health benefits of
our nation's veterans.
Mr. Speaker, I insert this letter for the Record.
Department of Veterans Affairs,
Veterans Health Administration,
Washington, DC, August 11, 1999.
Hon. Cliff Stearns,
Chairman, Subcommittee on Health, Committee on Veterans'
Affairs, House of Representatives, Washington, DC.
Dear Mr. Chairman: This is in response to your letter on
the impact on the Department of Veterans Affairs (VA) of H.R.
664, which would extend favorable government prices for
pharmaceuticals to the Medicare population.
We are very concerned that this proposed legislation would
have an indirect, negative impact on VA pharmaceutical
budgets. Section 3(c) of the bill would force covered
outpatient drug manufacturers to sell to Medicare-affiliated
pharmacies at the lower of the Medicaid reported best price
or the ``lowest price paid for [the drug] by an agency or
department of the United States''. The latter benchmark would
include not only low Federal Supply Schedule (FSS) and FSS
Blanket Purchase Agreement (BPA) prices negotiated by VA for
the Government, but also large volume committed use national
contract prices obtained by VA and/or Department of Defense
(DOD) in head-to-head competitive procurements. Perhaps most
importantly, the ``lowest price paid'' benchmark would
include many Federal ceiling prices (FCPs) already imposed on
manufacturers by the Veterans Healthcare Act of 1992, Section
603 (Public Law 102-585; 38 U.S.C. 8126).
By way of further information, through many recent
inquiries by drug manufacturers regarding this bill, we have
been informally informed that manufacturers may no longer
offer lower-than-FCP prices to VA and DOD in BPA and national
contract negotiations. They may also invoke 30-day
cancellation clauses in FSS contracts and BPAs, to the extent
allowed by Public Law 102-585, which would force Government
healthcare agencies to buy drugs in the open market at much
higher retail prices or AWPs (average wholesale prices).
In summary, we believe enactment of H.R. 664 would increase
VA's annual pharmaceutical costs by $500-600 million. We
would be pleased to discuss this matter further with you. If
you have additional questions, please contact me or Mr. John
Ogden, Chief Consultant for Pharmacy Benefits Management, at
202.273.8429/8426.
Sincerely,
Thomas L. Garthwaite, MD,
Acting Under Secretary for Health.
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