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drugs and their costs as part of on-going programs, such as Medicaid and the use of vendor systems in state welfare programs. Still other officials are preparing the dept.'s position on anticipated generic drug investigations and/or legislation on Capitol Hill.

For example, a Welfare Administration memo takes issue with the so-called Goddard view by recommending a study beamed at the enforcement program used by the military to get good generic drugs. Import as a study of clinical equivalency may be, the H-E-W official conte is, this project should not be mixed up with efforts the dept. must make in the area of establishing policy on drug pricing. Included in suggestions is a study on the broad range of mfrs.' prices to various levels of the trade, and the effect of rebates offered by mfrs. to state welfare programs. CHAINS' AVERAGE PRICE FOR GENERIC RX IS $2.44 V. $3.05 FOR INDEPENDENTS,

GOSSELIN TELLS NACDS CONFERENCE; AVERAGE FOR ALL RXS IS $3.38 V. $3.86 The spread between average chain and independent pharmacy prices is greater for generic Rxs-$2.44 v. $3.05—than the average for all Rxs-$3.38 v. $3.86.— market researcher Raymond Gosselin told the NACDS Pharmaceutical Converence No. 3.

The study also showed that generic Rx dispensing, while on the increase since 1966, is still far below the proportionate level of the mid-1940's. Generics will account for 8.6% of the 174 bil. Rxs dispensed in 1969, Gosselin predicted, up from 6.4% of 1 bil. Rxs in 1966 and 7.1% of 500 mil. during 1956, but well under the 1946 level of 36% of 250 mil. Rxs.

Gosselin's presentation to NACDS represented the first time he has broken down his Natl. Rx Audit figures by size of operation, and the first time he has compared generic and all-Rx figures on a chain v. independent basis. His statistics are based on a survey of more than

1,000 pharmacies. Generics accounted for a great proportion of Rx chains (11 or more units) than independents, but Gosselin warned against generalizing that the ratio of generics increases as chain size grows. Pharmacy operators with 4-10 units ranked lowest in generic dispensing (5.8%), followed by 2-3 store firms (7.4%), single outlet pharmacies (8.9%), and chains (9.3%).

Comparing new Rxs with refills by size of operation Gosselin said single stores have a 46.5% new-Rx rate, while the figure is 51.3% for 2-to-3-store firms, 49.6% for 4-to-10-unit operations and 50.1% for chains with 11 or more pharmacies. Total Rus Will Double in Next 10 Years With or Without Third-Party Programs

The total Rx market, Gosselin predicted, will double again within the next 10 years "with or without third-party programs." He questioned estimates made earlier in the conference by H-E-W's special asst. for pharmaceutical affairs, Dr. Mark Novitch, who said third-party plans would cover 60-to-70% of all Rxs by the mid-1970's.

Gosselin said he had no quarrel with the number of pre-paid Rxs being forecast, but he contended the future demand for non-third-party Rxs was being underestimated. “The third-party field hasn't been researched enough, especially by govt.," Gosselin declared.

Retail v. hospital Rx sales is another area riddled with misconceptions, Gosselin said. "Predictions that hospitals will take over the Rx drug business are almost as unfounded now as they were 10 years ago,” he said. Between 1958 and 1968 the retail share of the Rx drug market has held even at 75%, and over the next 10 years “at best, hospitals may

grow from 25% presently to 28% or 30%" he added. Some 160 drug chain execs attended the Nov. 2-4 meeting in Chicago, which focused on third-party programs (see next story). Speakers on other subjects were Purdue pharmacy Dean Varro Tyler, and Bruce Bernstein, director, retail drug div., Roth-Young Personnel Services.

NACDS will hold its 1970 Pharmaceutical Conference at Williamsburg, Va., Sept. 9–12. Its Cosmetic Conference will be in NYC June 7-9, the Control & Methods Conference Nov. 3-6 in Dallas, and the assn.'s annual meeting April 12-16 in Bal Harbour, Fla.

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CALIFORNIA ATTORNEY GENERAL SAYS PHARMACISTS DON'T DISPENSE LOWEST

COST DRUGS FOR MEDI-CAL; ACQUISITION COST DEFINITION BRINGS CRITICISM OF RETAILERS AND FORMULARY

The Calif. attorney general has charged that many pharmacists are violating the Medi-Cal formulary's rule that “the pharmacist shall, in consultation with the prescriber, dispense the lowest-cost item he has in stock, including generic equivalent, which meets the medical needs of the recipient.”

The 74-page report, covering all aspects of the Medi-Cal program, was accompanied by a four-page press release which helped it garner extensive lay-press coverage, including the Wall Street Journal and the New York Times.

The report listed some nine ways “in which pharmacies are engaging in activities which violate the laws and regs governing Medi-Cal.” The charges ranged from outright fraud and kickbacks to situations, such as dispensing “excessive" Rxs, where the fault may lie with the MD, not the pharmacist. (See box on next page for text of the violations

imputed to pharmacists.) The criticism about failure to dispense the lowest-cost drug contended that "a brand name is always more expensive than the generic-name drug' and often "is as much as two or three times more expensive. It added that “in situations where an inexpensive generic drug could have been dispensed, the patient has been given an expensive brand-name drug."

COMPULSORY GENERIC PRESCRIBING ON GOVERNMENT PROGRAMS NOT FEASIBLE UNTIL CLINICAL EQUIVALENCY IS PROVEN, H-E-W REPORT MAY TELL WHITE HOUSE

Compulsory generic prescribing on all federal programs is not feasible until it can be demonstrated that generic equivalents actually provide the same therapeutic benefits, the H-E-W Dept. may tell the White House in its report on the costs of medical care.

If reflected in the final report, scheduled to go to President Johnson in a few weeks, this view will be in line with the thinking of FDA Com. Goddard, who arranged a trip for dept. officials to the military drug procurement center in Philadelphia last December ("The Pink Sheet” Jan. 2).

Purpose of the meeting was to learn how the military insures quality drugs for its personnel via a procurement program based largely on generics. Both Goddard and Public Health Service Surgeon General Dr. William Stewart are understood to be interested in getting appropriations to support studies of "clinical equivalency” by their agencies.

Drug prices have not made a major contribution to the increasing costs of medical care, the report might say, quoting Consumer Price Index

statistics to show that MDs fees and hospital charges have shot upward. A statement like this in a prestigious govt. report would support the case which the Pharmaceutical Mfrs. Assn. (PMA) has been preparing and documenting for months in anticipation of attacks on Capitol Hill during this session as part of the drive to enact generic drug legislation. The PMA case was unveiled to closed meetings of members held in NYC and Chicago last week, and was well received as a good start on a “professional job.” White House Report May Call For Competition At Pharmacy As Well As Manu

facturing Level H-E-W, however, may dull the thrust of its "good word” for the industry by pointing out that drug costs are higher than they would be if greater price competition existed, either at the manufacturing or retail pharmacy levels. The Kefauver investigation might be used as a reference to show the role of promotion costs in the prices of branded drugs.

Absence of an official or authoritative source of information for MDs on the effectiveness and safety of drugs, and the need for FDA to do something about this-another Goddard favorite project-also could be discussed in the White House report.

Even when generics are prescribed, the report may say, the pharmacist might not dispense a lower cost drug. Some drafts of the report are critical of

the mark-up system in this regard. While the White House report is being finished, memos also are circulating around the dept. among officials who have to deal directly and immediately with

drugs and their costs as part of on-going programs, such as Medicaid and the use of vendor systems in state welfare programs. Still other officials are preparing the dept.'s position on anticipated generic drug investigations and/or legislation on Capitol Hill.

For example, a Welfare Administration memo takes issue with the so-called Goddard view by recommending a study beamed at the enforcement program used by the military to get good generic drugs. Import as a study of clinical equivalency may be, the H-E-W official contends, this project should not be mixed up with efforts the dept. must make in the area of establishing policy on drug pricing. Included in suggestions is a study on the broad range of mfrs.' prices to various levels of the trade, and the effect of rebates offered by mfrs. to state welfare programs. CHAINS' AVERAGE PRICE FOR GENERIC RX IS $2.44 v. $3.05 For INDEPENDENTS,

GOSSELIN TELLS NACDS CONFERENCE; AVERAGE FOR ALL RXS is $3.38 V. $3.86 The spread between average chain and independent pharmacy prices is greater for generic Rxs--$2.44 v. $3.05—than the average for all Rxs—$3.38 v. $3.86.--market researcher Raymond Gosselin told the NACDS Pharmaceutical Converence No. 3.

The study also showed that generic Rx dispensing, while on the increase since 1966, is still far below the proportionate level of the mid-1940's. Generics will account for 8.6% of the 174 bil. Rxs dispensed in 1969, Gosselin predicted, up from 6.4% of 1 bil. Rxs in 1966 and 7.1% of 500 mil. during 1956, but well under the 1946 level of 36% of 250 mil. Rxs.

Gosselin's presentation to NACDS represented the first time he has broken down his Natl. Rx Audit figures by size of operation, and the first time he has compared generic and all-Rx figures on a chain v. independent basis. His statistics are based on a survey of more than

1,000 pharmacies. Generics accounted for a great proportion of Rx chains (11 or more units) than independents, but Gosselin warned against generalizing that the ratio of generics increases as chain size grows. Pharmacy operators with 4-10 units ranked lowest in generic dispensing (5.8%), followed by 2–3 store firms (7.4%), single outlet pharmacies (8.9%), and chains (9.3%).

Comparing new Rxs with refills by size of operation Gosselin said single stores have a 46.5% new-Rx rate, while the figure is 51.3% for 2-to-3-store firms, 49.6% for 4-to-10-unit operations and 50.1% for chains with 11 or more pharmacies. Total Rus Will Double in Next 10 Years With or Without Third-Party Programs

The total Rx market, Gosselin predicted, will double again within the next 10 years "with or without third-party programs." He questioned estimates made earlier in the conference by H-E-W's special asst. for pharmaceutical affairs, Dr. Mark Novitch, who said third-party plans would cover 60-to-70% of all Rxs by the mid-1970's.

Gosselin said he had no quarrel with the number of pre-paid Rxs being forecast, but he contended the future demand for non-third-party Rxs was being underestimated. “The third-party field hasn't been researched enough, especially by govt.,” Gosselin declared.

Retail v. hospital Rx sales is another area riddled with misconceptions, Gosselin said. “Predictions that hospitals will take over the Rx drug business are almost as unfounded now as they were 10 years ago," he said. Between 1958 and 1968 the retail share of the Rx drug market has held even at 75%, and over the next 10 years "at best, hospitals may

grow from 25% presently to 28% or 30%," he added. Some 160 drug chain execs attended the Nov. 2-4 meeting in Chicago, which focused on third-party programs (see next story). Speakers on other subjects were Purdue pharmacy Dean Varro Tyler, and Bruce Bernstein, director, retail drug div., Roth-Young Personnel Services.

NACDS will hold its 1970 Pharmaceutical Conference at Williamsburg, Va., Sept. 9-12. Its Cosmetic Conference will be in NYC June 7-9, the Control & Methods Conference Nov. 3-6 in Dallas, and the assn.'s annual meeting April 12-16 in Bal Harbour, Fla.

CALIFORNIA ATTORNEY GENERAL SAYS PHARMACISTS DON'T DISPENSE LOWEST

COST DRUGS FOR MEDI-CAL; ACQUISITION COST DEFINITION BRINGS CRITICISM
OF RETAILERS AND FORMULARY

The Calif. attorney general has charged that many pharmacists are violating the Medi-Cal formulary's rule that “the pharmacist shall, in consultation with the prescriber, dispense the lowest-cost item he has in stock, including generic equivalent, which meets the medical needs of the recipient.”

The 74-page report, covering all aspects of the Medi-Cal program, was accompanied by a four-page press release which helped it garner extensive lay-press coverage, including the Wall Street Journal and the New York Times.

The report listed some nine ways “in which pharmacies are engaging in activities which violate the laws and regs governing Medi-Cal.” The charges ranged from outright fraud and kickbacks to situations, such as dispensing "excessive" Rxs, where the fault may lie with the MD, not the pharmacist. (See box on next page for text of the violations

imputed to pharmacists.) The criticism about failure to dispense the lowest-cost drug contended the "a brand name is always more expensive than the generic-name drug' and often “is as much as two or three times more expensive.” It added that “in situatio!'. where an inexpensive generic drug could have been dispensed, the patient bis been given an expensive brand-name drug.”

COMPULSORY GENERIC PRESCRIBING ON GOVERNMENT PROGRAMS NOT FEASIF
UNTIL CLINICAL EQUIVALENCY IS PROVEN, H-E-W REPORT MAY TELL WHITE HOT :

Compulsory generic prescribing on all federal programs is not feasible unti can be demonstrated that generic equivalents actually provide the same th peutic benefits, the H-E-W Dept. may tell the White House in its report on costs of medical care.

If reflected in the final report, scheduled to go to President Johnson in a weeks, this view will be in line with the thinking of FDA Com. Goddard, whe ranged a trip for dept. officials to the military drug procurement center in P delphia last December (“The Pink Sheet" Jan. 2).

Purpose of the meeting was to learn how the military insures quality drug its personnel via a procurement program based largely on generics. Both Goo and Public Health Service Surgeon General Dr. William Stewart are under to be interested in getting appropriations to support studies of "clinical eq lency” by their agencies.

Drug prices have not made a major contribution to the increasing cost of medical care, the report might say, quoting Consumer Price Inde

statistics to show that MDs fees and hospital charges have shot upware A statement like this in a prestigious govt. report would support th. which the Pharmaceutical Mfrs. Assn. (PMA) has been preparing and docu ing for months in anticipation of attacks on Capitol Hill during this sese part of the drive to enact generic drug legislation. The PMA case was w to closed meetings of members held in NYC and Chicago last week, az well received as a good start on a “professional job.” White House Report May Call For Competition At Pharmacy As Well As

facturing Level H-E-W, however, may dull the thrust of its "good word” for the indu pointing out that drug costs are higher than they would be if greater pric petition existed, either at the manufacturing or retail pharmacy leve Kefauver investigation might be used as a reference to show the role motion costs in the prices of branded drugs.

Absence of an official or authoritative source of information for MDs effectiveness and safety of drugs, and the need for FDA to do somethin this-another Goddard favorite project-also could be discussed in the House report.

Even when generics are prescribed, the report may say, the pharmo might not dispense a lower cost drug. Some drafts of the report are critico

the mark-up system in this regară. While the White House report is being finished, memos also are cir around the dept. among officials who have to deal directly and immediat

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