Plan To Protect USA's Veterans' Affairs From Drug Price Rises

US Representative Cliff Stearns, chairman of the House Veterans' Affairssubcommittee on health, is planning to introduce legislation to protect the VA from the threat of drug price rises. The announcement came after VA officials warned a subcommittee hearing that there could be price rises for the Department of Veterans' Affairs as high as $250 million in the cost of buying drugs, if the federal supply schedule for drugs were to be opened to state and local government purchasers. General Accounting Office testimony backed up the VA statements.

Rep Stearns said history tells us change in the market will lead many producers to raise their federal prices if the size of the market which can buy from a federal price list grows substantially. Congress faced the same problem after the 1990 Budget Reconciliation Act, which required firms to give rebates to state Medicaid programs based on the lowest prices charged to other buyers; many drugmakers then substantially raise the prices they charged the VA. It took legislation to solve that, he said, and the same problem may come up again.

A provision of 1994's Federal Acquisition Streamlining Act scheduled to take effect later this year allows for such an expansion. The Administration proposes legislation that could more than triple the size of the market which can buy from the FSS. Rep Stearns' proposed legislation calls for a two-year pilot program in which state and local government purchasers could buy a broad spectrum of treatments for HIV and AIDS-related conditions.