Pharmaceutical Companies File Suit Over DOD Prescription Drug Rebate Plan
A coalition of pharmaceutical companies has filed a lawsuit against the Bush administration, alleging that a Department of Defense plan to collect rebates for prescription drugs purchased by military personnel and their families at retail pharmacies is illegal, the Washington Post reports. The rebate program, which was designed in 2002, was intended to ensure that drugs purchased by military personnel at pharmacies would have the same discount as drugs distributed through DOD's hospitals, clinics and mail-order program.
The program was implemented in 2004, and lawmakers cut $172 million from the fiscal year 2005 defense budget because of expected savings from the program. However, to date the military has received less than 20% of the projected $300 million in rebates this year, according to Col. James Young, who recently retired as director of the Pentagon's pharmacy programs. Abbott Laboratories is the only drug company that has reported paying the rebates to DOD.
Pharmaceutical industry officials have said the plan is illegal because individual beneficiaries, rather than the government, are making the purchases. The lawsuit -- filed by the Coalition for Government Procurement, an industry group -- "has escalated tensions" between the industry and the Bush administration and has "dampened hopes for a compromise," the Post reports.
Wyeth spokesperson Chris Garland said, "Wyeth already provides medications to [DOD] at significantly discounted contracted rates," adding, "This is going through the court system. It has not yet been determined they legally have the right" to collect refunds on retail purchases.
Melbourne Noel, a senior contract attorney for the Department of Veterans Affairs who is defending the case for DOD, said the government is entitled to the full rebate from purchases at pharmacies because "DOD controls the purse." Noel added that the lawsuit has implications for a VA plan to implement a similar rebate program (Connolly, Washington Post, 8/13).