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© St. Petersburg Times, published October 4, 2002
WASHINGTON -- Bush administration officials and drug company executives Thursday failed to resolve a pricing dispute that has threatened the industry's new discount program for seniors.
Representatives of the Together RX card disputed the administration's interpretation of a law that could force the companies to limit the discounts available to Medicare beneficiaries who use the card. Officials of the Center for Medicare and Medicaid Services, however, refused to back down.
Tom McKenna, Bristol-Myers Squibb senior vice president, who attended the one-hour meeting, said Center for Medicare and Medicaid Services officials pledged to resolve the dispute "one way or another" as soon as possible. He predicted the two sides would meet again once government officials have reviewed Together RX pricing data.
Together RX card is a cooperative venture of seven major drug manufacturers that promises savings of up to 40 percent on about 150 drugs commonly used by seniors. Since the program was launched in June, nearly 300,000 have signed up for the card. To be eligible, an applicant's income cannot exceed $28,000 for a single person and $38,000 for a couple.
The pricing dispute arose in June when Center for Medicare and Medicaid Services administrator Tom Scully declared that federal law prohibits these companies from offering discounts in excess of 10 percent to Medicare patients unless they make the same low price available to the government's Medicaid program.
Industry officials argued they could not afford to lower prices for Medicaid, too. They also disputed Scully's interpretation of the law, and asked the center to revise it in the interest of 11-million Medicare patients who lack prescription drug coverage and can get lower prices using the card.
Under the Medicaid program, which provides health care to poor people of all ages, the drug companies are required to offer the government their "best price." Scully believes the Together RX card may have established a new "best price" on some drugs.
The companies argue the "best price" law does not come into play because the Together RX discounts go directly to individuals purchasing the drugs, and pharmacies still must pay full price to acquire the medicines.
Scully told reporters Thursday the drug companies had created this crisis by failing to provide Together RX price data he had requested in June. The companies insisted Scully never asked them to submit the data.
Two drug companies, Bristol-Myers Squibb and GlaxoSmithKline, announced this week that they were raising their prices for Together RX cardholders because Scully would not reconsider his interpretation of the law.
But Scully refused to accept the blame. "To say they are raising prices and blaming us is absurd."
The other companies participating in the card are Abbott Laboratories, AstraZeneca, Aventis, Johnson & Johnson and Novartis. AstraZeneca spokeswoman Janet Caldwell said her company has not raised prices because it does not believe the best price rule applies.
Drug companies are traditionally secretive about their prices, which vary widely for different customers. Although the companies promised to give some Together RX pricing data to Center for Medicare and Medicaid Services officials, they will do it in a way that prevents the other companies from learning about the prices.
Mary Anne Rhyne, spokeswoman for GlaxoSmithKline, said her company will restore the full discounts to Together RX customers if they get a favorable ruling from the Center for Medicare and Medicaid Services. "We're hoping that's sooner rather than later," she said.
McKenna said an unfavorable ruling would not cause the companies to withdraw the Together RX card, but would limit the savings to seniors. "It's a shame we can't give them more," he said.