The PhRma Cowers before ACT UP!
Justice Prevails for PWAs.
In the face of the ACT UP Demo,
the PhRMA greedheads dropped their outrageous lawsuit.
AIDS Treatment News
Pharmaceutical Industry Sues to Stop Discount Pricing to Clinics
PhRMA (the Pharmaceutical Research and Manufacturers of America), a trade
association of the largest drug companies, filed suit in July 1996 to stop
the government from requiring pharmaceutical companies to provide discounts
to thousands of public medical clinics, ADAP programs, and other government-
supported medical programs for the poor. Discounts to Medicaid, and to programs
large enough to have their own pharmacies, apparently would not be affected
by this lawsuit.
Supporters of the clinics believe the suit is without merit. The Public
Hospital Pharmacy Coalition (phone 202/624-7346), along with community health
centers and other representatives of facilities that receive the discounts,
is preparing to file a friend-of-the-court brief against the PhRMA suit.
This dispute concerns a law (Section 340B of the Public Health Service Act),
passed by Congress in 1992, which requires pharmaceutical companies to offer
deep discounts to certain government entities, as a condition for Medicaid
buying the company's drugs. The prices under this program are, on average,
about 40% below "average wholesale price," or about 20% lower
than prices paid by group purchasing organizations. The PhRMA lawsuit is
not trying to overturn this law itself; instead, it is trying to stop the
government-funded facilities and clinics from contracting with outside pharmacies
to dispense the drugs. This would greatly limit the deep-discount program,
since many of the clinics are too small to have their own pharmacies. They
would not be able to send their patients to have their prescriptions filled
at a discount by pharmacies elsewhere, greatly increasing the financial
burden of providing healthcare for the poor and uninsured.
At this time only about a dozen of the state ADAPs (AIDS Drug Assistance
Programs) use the discount pricing. This is because most ADAPs do not operate
their own pharmacies capable of buying the drugs at the discounted rates.
However, many of the non-participating ADAPs could join the 340B program
by taking advantage of the contract pharmacy model. The PhRMA lawsuit, if
successful, would eliminate this option, preventing most ADAPs from stretching
their dollars farther in paying for AIDS drugs.
PhRMA complains that guidelines on contracting with pharmacies was not published
in the Federal Register, as it claims the law requires, but instead were
released on a government computer system set up to dispense information
about the Section 340B program. PhRMA also claims that companies cannot
adequately protect themselves from diversion of low-price drugs to non-covered
patients. The Public Hospital Pharmacy Coalition says that the companies
and the government both have the right to audit the records of the organizations
using the program, and that no documented instances of intentional diversion
have occurred. The PHPC also believes that the government followed the proper
procedures in developing and publishing the guidelines.
PhRMA also argues that companies would be violating state laws if they sold
prescription drugs or controlled substances to clinics which are not pharmacies
-- and that if the sale were considered to be to the pharmacy with which
a clinic had contracted, then there is no provision in Section 340B for
such a sale. In response, PHPC points out that the 340B statute is silent
on the issue of contract pharmacies, and that, under state laws, such arrangements
This PhRMA lawsuit is one of the thousands of private and public efforts
now underway to increasingly abandon responsibility to the poor and the
sick, exacerbating the damage from the growing disparity of wealth. Unless
the public organizes to defend itself, more and more people will have no
viable place in the future.
As we announced in our last issue, on October 11 a major demonstration sponsored
by several AIDS organizations will target PhRMA over drug pricing; for more
information call 215/731-1844, or email email@example.com.
Our own view is that for long-range strategy, drug pricing should not be
an AIDS-specific issue, but rather a coalition issue involving the many
publics and organizations affected. Also, we believe that the best strategic
goal may not always be to reduce prices overall, but rather to make sure
that those who need medical care are not denied it. For example, even a
large reduction in the prices of protease inhibitors would not make them
affordable out of pocket for most people; therefore, it might be better
to focus on effective government, private, and other patient assistance
programs, on enabling those currently uninsured to obtain access to medical
coverage, and on facilitating the testing of nutritional, herbal, and other
nonproprietary low-cost treatment options, which today are unlikely to be
studied in scientific trials either before or after they have become widely
Tell the PhRMA what you think of them!
Mail: 1100 15th St. NW, Washington, DC 20005
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