Generic Drugs and the Hot Spot

"Pharmaceuticals are the most politically charged Medicaid issue." That's how Ray Hanley, the former director of Medicaid for Arkansas, introduced the last panel ...
November 21, 2006

Walmart_logo2 "Pharmaceuticals are the most politically charged Medicaid issue."

That's how Ray Hanley, the former director of Medicaid for Arkansas, introduced the last panel of the last day of the National Association of State Medicaid Directors' annual conference, held last week here in the DC area.

If Hanley were a playwright, you'd say his opener was heavy-handed foreshadowing.

Instead of the usual tame and ultra-polite presentations of the panelists, there were fireworks --heated rejoinders, verbal blows and demands for equal time to answer charges. Sitting in the front row, this correspondent felt she was sitting ringside at a grudge-heavy boxing match.

The subject? Wal-Mart's plan to sell 30-day supplies of 300 generic drugs at $4 a pop.

Bill Simon, Wal-Mart's man in charge of the pharmacy program, got the ball rolling, noting that Wal-Mart's decision to sell the drugs at $4 -- the retail company would still make a profit at that price, he said -- was a happy combination of a good business model intersecting with good public policy.

The panelists who followed -- John Coster from the National Association of Chain Drug Stores ("Wal-Mart's prices are part of a larger picture state Medicaid directors have to look at."); Deirdre Duzor, director of pharmacy for the Center for Medicaid State Operations at CMS ("We may see a lot of change as brand name drugs come off patents."); Sybil Richard, deputy secretary for Florida's Medicaid program ("$4 generics are a success for Medicaid. I hope other pharmacies join on.") -- were thoughtful and relatively dry.

Then came Charles Sewell, representing the independent pharmacists. Sewell was not one to take an academic, theoretical or even calm approach. He  attacked Wal-Mart's $4 generic program as less than it seems ("It's not really 300 drugs, it's only 143"), that the $4 generics were a loss leader and a bait-and-switch ploy.

Then he went for the knock-out blow: Wal-Mart, he reminded the Medicaid directors, had tens of thousands of their employees on Medicaid rolls, the FBI had raided their stores over illegal immigrants, the stores had forced workers of work off the clock and had violated the family leave act.

"Wal-Mart" he concluded, his face taking on a bit of a flush, "is always trying to force small businesses out of business. This is predatory pricing."

It's a little surprising when tempers show at otherwise staid conferences. But the heated words didn't end there. During the Q and A that followed the formal presentations, Sewell and Simon jockeyed for the upper hand, almot grabbing for the microphone to refute what the other said. 

One thing's clear. It's not just pharmaceuticals that are politically charged. Low pricing of generics can really get the blood boiling, and everyone from state legislators to health policy makers will be hearing a lot more about them.