REP. DINGELL's THIRD DRUG DIVERSION HEARING IS ONE OF TWO DRUG INDUSTRY ISSUES

Executive Summary

REP. DINGELL's THIRD DRUG DIVERSION HEARING IS ONE OF TWO DRUG INDUSTRY ISSUES scheduled for formal Capitol Hill attention as Congress returns from its August recess. Slated for Sept. 19, before Dingell's House Oversight & Investigations Subcmte., the hearing is expected to feature testimony from the major pharmaceutical trade assns., including their thoughts as to possible solutions to drug diversion and counterfeiting. Proposals discussed to date include restrictions on mfrs.' sampling, modification of Rx drug price differentials, and limiting to hospitals' own use Nonprofit Institutions Act exemptions to the Robinson-Patman Act's antitrust prohibitions. The Pharmaceutical Mfrs. Assn., the American Pharmaceutical Assn., the Natl. Assn. of Retail Druggists, the Natl. Assn. of Chain Drug Stores, and the Natl. Whsle. Druggists' Assn. are expected to testify. In addition, defendants named in the Atlanta drug diversion case have been requested to appear, as has Los Angeles attorney Arthur Chenen. Chenen represents at least two California "brokers" that buy discounted pharmaceuticals from hospitals for resale to whslrs. In promotional brochures distributed to hospitals, the brokers cite an opinion which is written by Chenen and states that the practice is legal because the broker does not purchase products from hospitals that received special discount for nonprofit hospital. The Senate Finance Cmte. has scheduled hearings on tax reform proposals through the end of September and first week of October. The impact of the tax proposals on regulated industries and provisions relating to U.S. possessions and territories will be addressed at an Oct. 3 hearing.