Extending VA to the Rest of the Universe: Been There, Flubbed That

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  • 01/18/2007
Lest anyone thinks that the brilliant suggestion that the government use its bulk purchasing power to drive down drug prices using the VA system is something new or will work like a charm...step into drugwonks Wayback machine and journey back to the year 2000, the last time the Yankees were World Champions and Al Gore did not tip the scales at 300 pounds......

This from US Medicine Information Central...

" While it may take two to tango, the SAMBA issue hanging over the Department of Veterans Affairs and pharmaceutical manufacturers is drawing a full dance card.

SAMBA in this case stands for the Special Agents Mutual Benefit Association, a participant in the Federal Employees Health Benefits Program (FEHBP). It covers about 16,000 employees and retirees of the Federal Bureau of Investigation and other federal law enforcement agencies and their dependents.

Under a two-year pilot project now in effect, SAMBA will have access to the Federal Supply Schedule (FSS) and its discounted drug prices as a means of holding down the size of premium increases. Office of Personnel Management (OPM) officials, who approved the pilot after SAMBA requested access to the FSS, say the "experiment" will provide valuable experience in establishing a schedule similar to the FSS for the entire FEHBP.

FSS discounted pricing generally is available only to the "big four" federal agencies that provide health care directly�VA, the Defense Department, the Public Health Service and the Coast Guard. Drug manufacturers are concerned that the SAMBA pilot could lead to a drop in revenues by making discounted pricing available to the entire FEHBP, which covers about 9 million "beneficiary lives"�and perhaps even extending it to other big-ticket programs such as medicare and medicaid."

A no-brainer right? In more ways than one...

Seems as though the VA had a problem or two with the project...

"Veterans advocates caution that the pilot ultimately could cut into the funds available to care for veterans by prompting manufacturers to raise the discounted prices they give to VA to make up for the funds lost because of the pilot or the creation of a new FEHBP pricing schedule. The issue is a complex one involving subparts of federal regulations and bureaucratic purchasing arrangements between drug firms, pharmacy benefit managers and the VA. A meeting held for manufacturers last month at OPM drew a full house but few questions, especially after an attorney from the Pharmaceutical Research and Manufacturers of America (PhRMA) cautioned that individual company reactions to the pilot program could not be discussed without violating antitrust regulations."

And companies simply walked away...

Washington Matters - November 2000
from Drug Benefit Trends

Big Drug Makers Scuttle New Drug Coverage
The federal government has backed off from a test of a new way to pay for the medications used by its employees. The reason for scuttling the pilot project is that both Pfizer and Merck refused to go along. The idea was that the 16,000 active and retired federal law enforcement employees who receive health care coverage through the health plan of the Special Agents Mutual Benefits Association (SAMBA) would be able to buy medications by mail and have them supplied through the Federal Supply Schedule (FSS). The FSS lists the price the government will pay for 17,000 drugs -- generally, about half the wholesale price of the product or around what the drug makers charge to their best private sector customers. The federal Office of Personnel Management (OPM) decided it could not go forward with the plan with the 2 major suppliers, who refused to fill orders from SAMBA enrollees at FSS prices."

Imagine what would happen if Medicare tried to extend VA prices to 50 million seniors.

Walk away? More like a stampede.

Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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