MEDICARE DRUG PROGRAM FORMULARY MAY BE CONSIDERED

Executive Summary

MEDICARE DRUG PROGRAM FORMULARY MAY BE CONSIDERED by the Bush Administration to contain program costs despite the Catastrophic Care Act's prohibition against establishment of a formulary, according to Merrell Dow VP-Government Relations Ronald Docksai, PhD. In comments to a March 30 session of the annual Northeast Pharmaceutical Conference, Docksai said he personally "would not make book on there not being a formulary" established for the program "in the next two or three years." Docksai said he is "skeptical" that the law's prohibition can prevent implementation of a formulary by HHS. After the session, he explained that the department simply must avoid use of the term "formulary" if it implements a restriction on covered therapies. The former HHS assistant secretary for legislation noted that the Reagan Administration, fearful of high costs, last year opposed inclusion of a drug program under the Catastrophic Care Act. Subsequently, as support for the legislation increased and enactment became more likely, the administration discussed cost-control options it could endorse, Docksai noted. Several administration officials "very actively fought the idea of a [statutory] proscription against a formulary," he said. The Health Care Financing Administration still projects dangerously high costs for the Medicare drug program, Docksai pointed out. "Based on its latest budgetary projections, the Medicare Rx Drug Trust Fund could be insolvent within three years," he said. "HCFA actuaries now predict a deficit . . . of about $ 650 mil. by the end of calendar year 1991," resulting from outlays of $ 3 bil. and premium revenues of just $ 2.4 bil., Docksai said. HCFA estimates that "up to 25% of Medicare beneficiaries could qualify for the outpatient drug benefit provision," whereas Congress predicted that 16.8% of beneficiaries would qualify for drug coverage, he noted. Besides restricting access to prescription drugs, HCFA is seeking a legislative amendment to increase the 1990 deductible to fund coverage for "the unforeseen 8%-10% increase in the number of Americans who qualify for outpatient drug coverage," Docksai continued. "HCFA is right now asking the administration to ask Congress to raise the 1990 Catastrophic deductible from $ 600 to $ 1,005," he said. Docksai criticized formularies as a kind of health care rationing. "One thing that ought to unite all of us who share a dedication to ever improving the quality of health care," is resistance against efforts by "the government or anyone to ration access to health care," he said. Efforts by HCFA to tell pharmacists which FDA-approved products are "therapeutically acceptable" and to dictate price levels for those products would constitute "the one most effective way to compromise the pharmacist's professional integrity."