INTRODUCTION

Welcome to the latest edition of the HDMA PAC newsletter. This has been an extremely busy year in Washington. As the Administration and Congress continue their efforts to enact healthcare reform, HDMA has been actively involved in the debate. There have been various proposals for reform, both in the House and the Senate, and it remains to be seen what will be included, if and when the final bill emerges. Several issues under consideration stand to affect the healthcare distribution industry.

ISSUE SPOTLIGHT

H1N1
HDMA’s primary healthcare distributor members have been critical participants in the healthcare supply chain, delivering antiviral and other medical products necessary to support the national response since the onset of the H1N1 influenza A virus. Our members are engaged and responding to this public health situation as they have been in the past during natural disasters and other public health emergencies. HDMA is engaged in discussions with members of Congress to highlight the role that healthcare distributors have in the distribution of vaccines and antivirals.

In addition, HDMA recently sent letters to governors’ offices and public health departments in all 50 states. The letters provided an overview of the distribution industry's H1N1 influenza pandemic preparedness efforts. Officials also were provided with a state-specific HDMA distributor member company contact list and a one-page backgrounder on distributors’ capabilities. HDMA distributor members continue to work with public health officials and supply chain partners to ensure a coordinated response to this serious public health issue. For more information, please visit our Web site.

Healthcare Reform

Congress and the Administration have made healthcare reform a top priority this year. The “America’s Affordable Health Choices Act of 2009” (H.R. 3200), the major healthcare reform bill introduced in the U.S. House of Representatives, would create an individual mandate for health insurance, provide a public health option in the form of a Health Insurance Exchange, and place new requirements on many employers to provide coverage, costing an estimated $1.3 trillion over ten years. The House Energy and Commerce Committee completed action in September. Two other committees, Education and Labor and Ways and Means, also approved H.R. 3200 prior to the August recess. Now, all three versions will need to be reconciled and combined into one bill before floor action is taken.

In the Senate, Finance Committee Chairman Max Baucus (D-MT) released his Chairman’s Mark, the “America’s Healthy Future Act” for discussion on September 16. The committee passed the bill on October 13 by a vote of 14 to 9. Senator Olympia Snowe of Maine was the only Republican voting in favor. The bill would tax high-cost health plans, impose new penalties on employers who don’t offer health insurance and cut spending on Medicare. The proposal is estimated to cost $829 billion over ten years.

HDMA has been actively working with members of Congress on issues affecting healthcare distribution in the various proposals including Average Manufacturer Price (AMP), Average Sales Price (ASP), and last-in, first-out (LIFO) repeal. Updates on each follow.

Average Manufacturer Price (AMP): The House bill includes a multiplier of 130 percent of weighted average AMP for the federal upper limit (FUL) and incorporates a more comprehensive definition for AMP by removing mail order and sales to pharmacy benefit managers (PBMs). The Senate Finance Committee version includes a multiplier of “not less than 175 percent” of weighted average AMP for the FUL. HDMA sent letters to Senate and House leadership as part of the AMP coalition expressing our preference for the Senate language.
Average Sales Price (ASP): An amendment was added to the House Energy and Commerce bill that would allow customary prompt pay discounts to wholesalers, up to two percent of WAC, to be excluded when ASP is calculated. HDMA commends the sponsors of the amendment for their work on this issue.
Last-in, First-out (LIFO) Repeal: Following the President’s suggestion to repeal LIFO in his February proposed budget, HDMA reached out to members to discuss the potential effects on healthcare distributors. At this time, LIFO repeal has not been put forth by either the House or the Senate as a way to pay for healthcare reform.

Ken Couch, President of Smith Drug Company (right), meets with Representative Marion Berry, (D-Ark.) (left) to discuss issues affecting his company and the healthcare supply chain.

HDMA MEMBERS ON THE HILL

As part of the HDMA Council meetings held in September, HDMA members participated in several important visits on Capitol Hill. HDMA members discussed key industry issues, such as the importance of addressing the average manufacturer price (AMP) formula in healthcare reform and the crucial role distributors play in H1N1 influenza preparedness. All of the meetings were productive and members of Congress and their staff appreciated hearing from their constituents on these important issues.

If you are interested in scheduling a meeting with your representatives, please contact Heather Morris.

PAC CONTRIBUTORS

This year, through the generous support of members, company PACs and HDMA staff, the HDMA PAC has successfully raised $62,500. These funds are a vital component of HDMA’s ongoing advocacy efforts. Thank you to our contributors for their support of the HDMA PAC in 2009.

TREND ALERT: NUMBER OF POLITICAL ACTION COMMITTEES INCREASES, GROWTH SLOWS

More groups than ever are contributing money to presidential and congressional candidates. The Federal Election Commission (FEC) reports that as of January 1, 2009, there were 4,611 PACs, a nine percent increase over the previous year. Although an increase is expected during a presidential election year, last year's growth was the strongest in a presidential year since 1984, when there was a 14 percent boost.

Financial activity by PACs continued its upward climb in 2007-2008, but at a slower rate than recent election cycles. According to figures compiled by the FEC, from January 1, 2007 through December 31, 2008, PACs raised $1.2 billion, up 10.5 percent over 2005-2006, and spent $1.18 billion, up 11.8 percent over the previous two-year cycle.

OBAMA'S READING LIST

Looking for a book to read? The Daily Beast compiled the following list of books that President Barack Obama has been seen with since the presidential campaign.

What Is the What: The Autobiography of Valentino Achak Deng by Dave Eggers
Netherland by Joseph O'Neill
Common Wealth: Economics for a Crowded Planet by Jeffrey D. Sachs
Lincoln: The Biography of a Writer by Fred Kaplan
Defining Moment: FDR's Hundred Days and the Triumph of Hope by Jonathan Alter
FDR by Jean Edward Smith
Ghost Wars: The Secret History of the CIA, Afghanistan, and Bin Laden, from the Soviet Invasion to September 10, 2001 by Steve Coll
Collected Poems, 1948 to 1984 by Derek Walcott
Hot, Flat, and Crowded: Why We Need a Green Revolution -- and How It Can Renew America by Thomas Friedman
Unequal Democracy: The Political Economy of the New Gilded Age by Larry Bartels
Team of Rivals: The Political Genius of Abraham Lincoln by Doris Kearns Goodwin
The Post-American World by Fareed Zakaria

ABOUT THE HDMA PAC

The HDMA PAC was created to give primary, full-service healthcare distributors a strong, unified political voice on Capitol Hill. The HDMA PAC is a qualified, multi-candidate PAC registered with the Federal Election Commission. A trade association PAC may not solicit a corporate member’s restricted class without its prior approval. Corporate contributions are not permitted. Contributions are not deductible for federal tax purposes.

If you would like more information or have any questions about the HDMA PAC, please contact Kristen Freitas, Associate Director, Federal Government Affairs, at kfreitas@hdmanet.org, 703-885-0232 or Heather Morris, Manager, Federal Government Affairs, at hmorris@hdmanet.org, 703-885-0272.