RX '04: THE BATTLE BEGINS

This election year, pharmacists are getting into the political ring.From the impact of the new Medicare reform law to prescription reimportation to the threat of counterfeit drugs, retailers are facing big issues related to drug pricing. With older Americans a potent voting block, this is expected to become part of the presidential election campaign, and pharmacists -- willing or not -- will be thrust

This election year, pharmacists are getting into the political ring.

From the impact of the new Medicare reform law to prescription reimportation to the threat of counterfeit drugs, retailers are facing big issues related to drug pricing. With older Americans a potent voting block, this is expected to become part of the presidential election campaign, and pharmacists -- willing or not -- will be thrust into the debate.

"Pharmacy has always been in the political arena. It's just a little more pressing this year," said John Bednarz, director of pharmacy, Food Lion, Salisbury, N.C.

The first battle on retailers' list is local governments' efforts to import lower-cost drugs from Canada.

Governors and mayors in at least 10 states and cities, including Boston, New Hampshire and Minnesota, have expressed interest in buying Canadian drugs for certain demographic groups like state workers, prison inmates and retirees.

Illinois Gov. Rod Blagojevich recently requested a waiver to let the state buy drugs from Canada for state workers and retirees, which would make it the first state to try a federally approved drug reimportation program. He estimated it would save the state $91 million a year, according to published reports.

"State governors expressing interest in drug reimportation from Canada will continue," said John Fegan, vice president, Ahold USA, Chantilly, Va. "I'm amazed the FDA hasn't given guidance or hasn't gone after the manufacturers on why drugs are cheaper up there. The government needs to look beyond retail to control state budget costs."

In the near future, there will be "some measured law that allows for reimportation accompanied by strict controls," said Jeanne Scott, who holds the title of talking-head-in-chief at health-politics.com, a Washington-based political health care consultancy firm.

"These legislators are talking about breaking federal law; it's disturbing," said Curtis Hartin, director of professional services, Schnuck Markets, St. Louis. "The [lawmakers] need to pass laws to provide affordable health care before advocating to break the law. It's just a way of grandstanding."

The U.S. Food and Drug Administration's Center for Drug Evaluation and Research gave a firm response to this controversial issue. "FDA is advising states and cities that they could face criminal action and financial liability if anyone is harmed by imported drugs," Crystal Rice, spokeswoman, FDA, told SN. "Therefore, importing drugs will put states and cities at risk of such enforcement actions. The agency could, through the Department of Justice, file civil lawsuits to stop drug imports."

The Medicare reform law signed by President Bush last month maintained the prohibition on imports, but authorizes the Health and Human Services secretary to conduct a study on the safety of Canadian imports.

The historic Medicare reform law, which includes an unprecedented $400 billion prescription drug benefit package for seniors, raises many questions among retailers this election year.

More than 7 million Medicare beneficiaries are expected to sign up for the temporary drug discount card when it becomes available this summer, according to published reports.

"I get the feeling that it will cut into our cash business, the little bit we have left of it," said Hartin.

"We're waiting to see the real-world outcome," said Bednarz of Food Lion. "It's been exciting that retail pharmacy had a seat at the table and a voice in constructing the bill, with the help of organizations like NACDS [National Association of Chain Drug Stores]."

"Overall, organizations like NACDS saw an opportunity for real change in Medicare reform, and basically they stepped up to the plate," added Teross Young, government relations manager, Food Lion.

"One of the most overlooked and essential benefits of the Medicare drug bill ... ensures that 40 million seniors can fill their prescription needs at neighborhood pharmacies at affordable prices," said Tim Hammonds, president and chief executive officer of Food Marketing Institute, Washington.

"The Medicare bill is going to be open for debate, and there will be continuing arguments all over the board," said Scott. "The election year will give more focus, more rhetoric and more promises, and Medicare reform could be a significant issue going forward."

Another political issue continuing to escalate in retail pharmacy revolves around state Medicaid budget cuts to shore up mounting shortfalls in the program.

"What we'll see within each state is wrangling over fiscal policy," said Hartin. "Every state is under the gun to control Medicaid costs. The government goes to retail pharmacy first [to raise revenues] because we're visible and they have jurisdiction over us."

Bednarz said the pharmacy industry and the government must find a "happy medium" to control escalating prescription drug prices. "There's a balancing act between the cost of drugs and their safety. It might come legislatively or through a solution by pharmacies, but there will be a focus on it during the next session of Congress."

Another politically charged pharmacy topic goes hand-in-hand with drug reimportation and the safety of the U.S. drug supply. Counterfeit drugs will be an ongoing obstacle to delivering safe and effective medications to customers, said retailers. Retail pharmacy and other industry groups are taking aggressive steps to ensure drug safety.

NACDS, Alexandria, Va., recently created a report in response to the FDA's call for advice to prevent counterfeit drugs. Preventative solutions in the report, "Industry Points of View on Counterfeit Prevention," included:

The use of radio frequency identification to trace drugs throughout the supply chain.

A classification system to identify drugs vulnerable to counterfeiters.

Strict licensing agreements with all drug distributors.

"Counterfeit drugs are an ongoing problem, and we have to be vigilant in protecting customer safety and health," Bednarz said. "I don't believe we've seen the end of it." Another issue affecting pharmacies in 2004 will be the possibility of emergency contraception switching to over-the-counter status. Last month, two FDA advisory committees recommended that Plan B, an emergency contraceptive distributed by Women's Capital Corp., Washington, in conjunction with Barr Laboratories, Woodcliff Lake, N.J., should be sold without a prescription.

This initiative reopens discussion of the need for a third class of drugs between prescription drugs and over-the-counter remedies, said Hartin of Schnucks.

"[Plan B] is a pretty powerful drug, and I'd be cautious to put it over the counter," said Hartin. "This type of drug lends itself to counseling because people won't be aware of its side effects unless they are educated."

As 2004 unfolds and these issues become hot buttons with the voting public and government officials, retailers need to voice their concerns, said industry observers.

"Retailers can't let down their guard for one minute. They must hold their own," said Scott. "They have more to lose, so they must continue to jockey for positioning."