Printer
Friendly Version
Click
here to read Senator Wyden's floor statement
on the Pharmaceutical Advertising and Prudent Purchasing Act
Click
here to view a one-page summary of the legislation
FEDERAL GOVERNMENT WILL PAY LESS FOR ADVERTISED
PRESCRIPTION DRUGS UNDER NEW WYDEN LEGISLATION
Legislation would mandate discount for Medicaid,
other Federal programson drugs
promoted to consumers with tax-deductible advertising
May 26, 2005
Washington, DC – The Federal
government would pay less for prescription drugs advertised directly
to consumers under new legislation introduced by U.S. Senator
Ron Wyden (D-Ore.) today. The bipartisan Pharmaceutical Advertising
and Prudent Purchasing Act, introduced with and U.S. Senator John
Sununu (R-N.H.), would require discounts for programs such as
Medicaid, to eliminate advertising costs passed on by pharmaceutical
companies as part of a drug’s price; drug companies already
receive tax deductions from the Federal government for their advertising
costs, as do most American businesses. Drugs advertised directly
to consumers are among those drugs on which Federal programs spend
the most total money for outpatient care; studies have indicated
that advertising, not medical need, may have contributed to national
upswings in prescriptions for those drugs. For this reason, the
Wyden legislation also requires a report to Congress on how drugs
advertised directly to consumers impact Federal programs in terms
of purchase volume, cost, and their suitability for patients’
medical needs.
“The government should
make smarter use of its purchasing power for drugs advertised
directly to Oregon consumers. The Federal government provides
a tax break for that advertising, and taxpayers shouldn’t
have to further subsidize the drug companies’ marketing
efforts through Medicare and Medicaid,” said Wyden. “It’s
also important to make sure that when the Federal government buys
drugs, they’re buying drugs patients need and not just the
pharmaceutical flavor of the month. Insisting on prudent spending
of tax dollars and getting the best medical outcomes are not mutually
exclusive – in fact, they may go hand in hand.”
Specifically, the Pharmaceutical
Advertising and Prudent Purchaser Act of 2005 would seek to reduce
the costs of directly-marketed prescription drugs in Medicaid,
Medicare and other Federal programs in the following ways:
• Requiring the Secretary
of the Department of Health and Human Services (HHS) to adjust
certain formulas for those drugs in the Medicaid rebate program,
which requires drug companies to have a pricing agreement with
the Federal government for medicines dispensed under Medicaid.
Changes would not occur for any drug for which the manufacturer
certifies that no direct-to-consumer advertising has taken place
in the previous 12 months.
• Requiring the HHS Secretary
and the Secretary of Veterans Affairs to negotiate a reduced price
for other programs for drugs advertised directly to consumers,
unless the drug manufacturer certifies that the drug has not been
advertised directly to consumers within the past 12 months. This
would affect the Public Health Service and related programs administered
by the Indian Health Service; the Department of the Veterans Affairs;
and the Department of Defense and the Defense Health Program.
In addition, the legislation
requires an HHS report on ways that Congress and Federal agencies
could reduce taxpayers’ costs in Medicare (Parts A, B and
D) for drugs advertised directly to consumers, and strategies
to make sure that drugs are prescribed in Federal programs based
on patients’ health needs, not on advertising. The HHS Secretary,
in consultation with the VA, would also be required to tell Congress:
• What percentage of drug
companies’ advertising costs are passed along to Federal
programs when they purchase medicines that have been advertised
directly to consumers;
• The 25 most frequently prescribed drugs that are directly
advertised to consumers and that are also purchased or reimbursed
by Federal agencies;
• The 25 most expensive prescription drugs that are directly
advertised to consumers and that are also purchased or reimbursed
by Federal programs;
• The aggregate amount that drug companies spend to advertise
to consumers for the 25 most expensive advertised drugs;
• Ways that Federal agencies and programs can share information
about drugs that are advertised to consumers, including the costs
and utilization of these drugs; and
• Additional recommendations to help reduce Federal payments
for advertised drugs.
“This sensible savings
in this legislation offer relief not only to beneficiaries of
programs like Medicaid, but also to states that are stretching
their health care dollars and to the citizens footing the bill,”
said Wyden. “It’s time to take out a sharp pencil
and eliminate the hidden costs for Oregon taxpayers from these
advertised drugs.”
For more information on this
legislation, contact Andrew Blotky in Senator Wyden’s office.
###