Bill on pharmaceutical pricing pushed

February 17, 1994|By Kerry O'Rourke | Kerry O'Rourke,Sun Staff Writer

ANNAPOLIS -- Del. Donald B. Elliott, a Republican representing Carroll and Howard counties, yesterday continued his effort to end what he calls discriminatory pricing in the pharmaceutical industry.

His bill, which he also introduced last year, will benefit consumers, said Mr. Elliott, a Union Bridge pharmacist.

House Bill 522 would require that pharmaceutical companies charge retail pharmacies the same price for drugs that they charge hospitals, health maintenance organizations and mail-order companies.

"The big winners would be Maryland consumers," Mr. Elliott said during a hearing before the House Economic Matters Committee.

The price disparity is great, he said. Manufacturers often charge retailers 30 percent to 40 percent more, he said.

Franklin Goldstein, a Baltimore attorney representing the Maryland Association of Chain Drug Stores, testified in support of the bill.

The measure would "promote free and open competition on an equal footing in the marketplace," Mr. Goldstein said.

Daniel T. Doherty, a Frederick attorney representing the Pharmaceutical Manufacturers Association, testified against the bill, which he said would protect certain competitors in the industry.

Drugstore chains across the country have filed lawsuits against pharmaceutical companies over the issue, and some states are considering legislation similar to Mr. Elliott's.

After a hearing on his bill last year, the Economic Matters Committee asked for more study on the measure. In November, members met for a briefing with supporters and opponents.

Committee members asked a number of questions yesterday.

"Why is the system broken, in 25 words or less?" asked Del. Richard A. LaVay, a Montgomery County Republican.

Mr. Goldstein said the system doesn't work because drug manufacturers are free to decide to give discounts to certain customers.

When Mr. LaVay asked why, Mr. Goldstein responded, "Greed."

Committee Chairman Michael E. Busch, an Anne Arundel County Democrat, asked Mr. Doherty to explain why his clients elect to give discounts to certain customers.

Mr. Doherty said pharmaceutical companies sometimes give hospitals discounts because the hospitals are nonprofit institutions and the discount is considered charity. The companies sometimes give discounts to HMOs because they can sell a number of lines of drugs to the organization, he said.

Manufacturers give discounts to mail-order companies because of the volume the companies order, Mr. Doherty said. Distribution and delivery costs are cheaper, he said.

Robin F. Shaivitz, representing the Maryland Pharmacists Association, said retail pharmacists sell 70 percent of the prescription drugs in the United States.

"They should get the same discounts," she said.

The discounts offered to hospitals, HMOs and mail-order companies are driving smaller pharmacists out of business, she said.

Mr. Elliott's bill would lower the cost of drugs, and retail pharmacists would pass the savings on to customers, Ms. Shaivitz said.

The committee is to vote on the bill later.

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