[Congressional Record Volume 145, Number 142 (Tuesday, October 19, 1999)]
[Extensions of Remarks]
[Page E2129]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

[[Page E2129]]



                 VA PRESCRIPTION DRUG BENEFIT IN PERIL

                                 ______
                                 

                           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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