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Thank you for the really short time to comment on the FSIS Notice, FSIS Actions Concerning Suppliers

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th655 15 Street, N.W. Washington, DC 20005-5701 Tel: (202) 452-8444 Fax: (202) 429-4519 E-mail: fmi@fmi.org Web site: www.fmi.org November 25, 2002 Office of the Inspector General Department of Health and Human Services Attention: OIG-8-CPG Cohen Building 330 Independence Avenue, S.W. Washington, D.C. 20201 Re: Draft OIG Compliance Program Guidance for Pharmaceutical Manufacturers (File Code OIG-8-CPG) Dear Inspector General: The Food Marketing Institute (FMI) respectfully submits the following comments in response to the draft compliance document developed by the Department of Health and Human Services (HHS) Office of Inspector General (OIG) for the pharmaceutical manufacturing industry. 67 Fed. Reg. 62057 (Oct. 3, 2002). For your information, FMI is a non-profit association that conducts programs in research, education, industry relations and public affairs on behalf of its 2,300 members and their subsidiaries. Our membership includes food retailers and wholesalers, as well as their customers, in the United States and around the world. FMI’s domestic member companies operate approximately 26,000 retail food stores with a combined annual sales volume of $340 billion, which represents three-quarters of all grocery store sales in the United States. FMI’s retail members also operate close to 12,000 in-store pharmacy departments. We estimate that supermarket pharmacies account for nearly 14 percent of all ...
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November 25, 2002
655 15
th
Street, N.W.
Washington, DC 20005-5701
Tel: (202) 452-8444
Fax: (202) 429-4519
E-mail:
fmi@fmi.org
Web site: www.fmi.org
Office of the Inspector General
Department of Health and Human Services
Attention: OIG-8-CPG
Cohen Building
330 Independence Avenue, S.W.
Washington, D.C. 20201
Re:
Draft OIG Compliance Program Guidance for Pharmaceutical
Manufacturers (File Code OIG-8-CPG)
Dear Inspector General:
The Food Marketing Institute (FMI) respectfully submits the following comments in
response to the draft compliance document developed by the Department of Health and
Human Services (HHS) Office of Inspector General (OIG) for the pharmaceutical
manufacturing industry. 67 Fed. Reg. 62057 (Oct. 3, 2002).
For your information, FMI is a non-profit association that conducts programs in research,
education, industry relations and public affairs on behalf of its 2,300 members and their
subsidiaries. Our membership includes food retailers and wholesalers, as well as their
customers, in the United States and around the world. FMI’s domestic member
companies operate approximately 26,000 retail food stores with a combined annual sales
volume of $340 billion, which represents three-quarters of all grocery store sales in the
United States.
FMI’s retail members also operate close to 12,000 in-store pharmacy departments. We
estimate that supermarket pharmacies account for nearly 14 percent of all outpatient
prescription drugs dispensed in the United States. Based on current industry trends
toward larger store formats and the convenience of one-stop shopping, we anticipate that
the number of pharmacies located in supermarkets will continue to increase in the coming
years, as will the number of prescriptions that are dispensed on an outpatient basis from
these community settings.
File Code OIG-8-CPG
November 25, 2002
Page 2
As a result of the growing importance of pharmacy in the supermarket industry and
because FMI members dispense prescriptions to a significant number of patients that are
covered under federal health care programs, such as Medicaid and the Federal Employee
Health Benefits Plan, FMI is extremely interested in this important OIG initiative. In
particular, we are encouraged by the fact that the OIG has recognized in its compliance
guidance document that kickbacks and other illegal remuneration are a major potential
risk area for pharmaceutical manufacturers. Moreover, we believe that, if left
unmonitored, activities such as these may result in higher costs for prescription drugs,
which would adversely impact the economic well-being of federal health care programs
generally. Therefore, FMI strongly supports and welcomes the compliance document,
which we hope will curtail certain types of incentives, payments and other financial
arrangements between pharmaceutical companies and pharmacy benefit managers
(PBMs).
Our industry’s position is that any remuneration, other than a price reduction covered by
the discount exception, potentially implicates the anti-kickback statute. Moreover,
arrangements that would result in overutilization, higher government program costs,
inappropriate steering of federal health care business or unfair competition should be
considered in violation of anti-kickback laws. Switching arrangements are also very
suspect, and FMI urges the OIG to direct pharmaceutical companies to carefully review
any program that directly or indirectly rewards a PBM for switching a patient from a
competitor’s product to their product, especially if the switch results in the patient
receiving a more expensive medication.
Financial compensation paid by a pharmaceutical company to a PBM so that a particular
drug is placed on the PBM’s formulary should also be considered a potential violation
under federal anti-kickback laws. While many of these arrangements may be permissible
in private sector managed care programs, it is our belief that pharmaceutical companies
need to review this type of activity carefully in connection with their products that are
being reimbursed by federal health care programs.
One of the overriding reasons why there is such a high degree of suspicion and scrutiny
by employer groups, state legislators and federal investigators with respect to business
relationships between pharmaceutical manufacturing companies and PBMs is the lack of
accountability, disclosure and transparency by the PBM industry. PBMs routinely refuse
to disclose their financial arrangements with drug companies and they do not wish to be
subjected to any kind of accountability, such as an annual audit. In fact, FMI finds it
unconscionable that the PBM industry – which serves in an administrative capacity for
various federal prescription drug programs – is not subject to periodic audits. Without
the accountability that would result from regulatory controls and the financial scrutiny of
an audit, it is not possible to know with any certainty whether PBMs are helping to
control drug costs for the federal government or if these middlemen are a primary
contributing factor to skyrocketing drug costs.
File Code OIG-8-CPG
November 25, 2002
Page 3
On this important point, FMI urges the OIG to go beyond the issuance of its compliance
guidance document and recommend measures to the Secretary of Health and Human
Services that would result in greater accountability on the part of the PBM industry in
relationship to all federal health care programs in which these entities administer a drug
benefit. We believe that taxpayers and beneficiaries deserve nothing less, and in this
connection, FMI strongly supports a complete accounting by the PBM industry of all
payments, rebates, discounts and other financial incentives that these entities receive
from pharmaceutical manufacturers.
In conclusion, FMI appreciates the opportunity to provide these comments to the OIG.
Sincerely,
Tim Hammonds
President and CEO
File Code OIG-8-CPG
November 25, 2002
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