-2

Unfortunately, the law made no provision for free access to VA facilities in the U.S., something which would be most important to a Philippine veteran who might one day immigrate to the United States. The only VA facility available to these veterans is the United States subsidized one in Quezon City. They can be treated at a domestic VA hospital only in an emergency case and this treatment is subject to reimbursement by the veteran or on occasion by the Philippine government. This leads to the illogical and inconsistent conclusion that if a Commonwealth Army veteran is treated in the Philippines, it is an American obligation; but if he is treated in the United States, it becomes a Philippine obiigation.

In checking with the Veterans Administration, I found that this interpretation of the law is correct. In my judgment, however, it is inconceivable that a Filipino veteran, disabled in service to the United States when his country was American territory, who has subsequently migrated to this country, should have to travel halfway around the world to receive free treatment at a VA hospital when he may live within a few miles of one which provides the same services.

This situation was first brought to my attention by one of my constituents who is a Commonwealth Army veteran now living in Norfolk, Virginia. He served in the Luzon Guerrilla Army forces in World War II and has a 100 percent disability as a result of this service. He was recently hospitalized at the VA hospital in Hampton, Virginia for a period of 56 days. Some months after he left the hospital, he was notified, after the fact, by the VA that he was ineligible for

-3

free treatment in the United States. He was presented with a bill

It was

for services in the amount of $4,988. He receives only $330.50 each month in disability compensation. This is the maximum amount he can receive and he is supporting a wife and two children on that sum. It was clearly beyond his means to pay for this medical care. on behalf of my constituent that I introduced HR 8484. The bill very simply would allow these Commonwealth Army veterans who live in the United States to receive free treatment at VA medical centers in the

In any

U.S. I do not believe my constituent's case is unique because I seriously doubt that he is the only Commonwealth Army veteran living in the United States who occasionally needs medical care. event, I think it is very shabby treatment for the U.S. government to deny any veteran of our armed forces medical care in the United

States for his service-connected disabilities.

The total cost to the U.S. Treasury if this bill is enacted should be nominal; however, to the veterans involved it might literally mean the difference between life and death. I urge the members of this Committee to give favorable consideration to HR 8484.

Once again, I appreciate having the opportunity to testify before the Committee and I commend the Chairman for holding hearings

on this and other legislation of importance to our veterans.

Mr. SATTERFIELD. Also, I have received testimony from the Disabled American Veterans, Paralyzed Veterans of America, Inc., National Association of Retail Druggists' and Veterans of World War I, U.S.A., Inc. which, without objection, I will insert in the record at this time. I would also like to insert at this point a statement from Local 2107, American Federation of Government Employees. [The statements follow:]

PREPARED STATEMENT OF WILLIAM E. WOODS, WASHINGTON REPRESENTATIVE AND ASSOCIATE GENERAL COUNSEL, THE NATIONAL ASSOCIATION OF RETAIL DRUGGISTS

The National Association of Retail Druggists was established nearly a century ago to unite independent retail pharmacists and to provide a means whereby these pharmacists could contribute to their common improvement and the public good. Today, the National Association of Retail Druggists represents the owners of over 30,000 independent pharmacies in which over 50,000 pharmacists in this country practice their profession and dispense about 75 percent of the Nation's out-of-hospital prescription needs.

The independent community pharmacist today is simultaneously a professional practitioner and a small businessman. NARD and its members vigorously support the American free enterprise system which provides the only meaningful climate under which a small businessman can economically survive, have the opportunity to succeed by his own efforts and perform an important and essential service to his community.

Congressional action on health care can have a profound effect on the independent pharmacists of this nation and can, indeed, preserve or obliterate a place for the independent pratice of pharmacy as an important part of the free enterprise system. It can also allow our veterans the same freedom of choice in obtaining their prescription drug needs as is afforded to all other segments of society. For this reason we wish to urge your support of a bill that will give veterans an equal opportunity to enjoy the convenience and services of their community pharmacies-H.R. 3349.

In supporting H.R. 3349, the NARD wishes first to record without one iota of equivocation that it also totally supports the proposition that our veterans should receive their prescription needs as a Veterans Administration benefit. NARD has continually opposed the Veterans Administration policy of attempting to serve the pharmaceutical needs of veterans through the mails for a variety of reasons. We do, however, strongly support H.R. 3349, which seeks to provide veterans entitled to drug therapy at VA expense the right to choose for themselves the provider of that benefit. This is the same freedom of choice concept Congress has provided, indeed insisted upon, for Social Security beneficiaries under Medicare and the indigent entitled to prescription drugs under Medicaid. But veterans have been denied this same freedom of choice for far too long by VA edict and Congressional inaction and indifference. The time has come for a change, and the adoption of H.R. 3349 would effect such a change. Opposition to the measure comes from the VA, which is apparently motivated more by a desire to justify personnel and budget levels than to serve the needs of our veterans. The essential fact behind this continued VA denial of freedom of choice for veterans is a dollar sign: VA maintains simply that it is "cheaper" for VA if veterans obtain all drug therapy from VA facilities even if the vast percentage of veterans can only obtain the medication that they are entitled to by mail. We challenge VA's claim that this purely economic premise on which this second class care for veterans is based is valid. We question whether it is right even if it saves that what, at best, must be an insignificant sum annually. Our objective should be to assure veterans of adequate and appropriate prescription drug service, rather than to concentrate on how cheaply we can appear to supply a marginal level of prescription products.

The issue is not now, and never has been, whether veterans who now receive drugs should continue to be entitled to this benefit. NARD fully supports the present scope of the drug benefit and we would oppose any reduction or limitation on drug benefits beyond those in the present law. The men and women who defended and served this nation certainly deserve the health care, including drugs, currently provided to them and we should do no less.

77-086 0766

The issue is simply whether these veterans, like recipients of all other government drug programs should be permitted some alternative source for drug benefits apart from the VA drugs-by-mail plan, and whether each veteran will be permitted to choose from among these alternatives that one in his judgment serves his particular needs best. At present, the veteran has no choice and no alternative.

Initially, a veteran rightfully was treated like any other citizen and had complete freedom to choose his own provider of pharmaceutical services. For about 20 years, the Veterans Administration administered the veterans' drug benefit through the Hometown Pharmacy Program under which prescribed drugs for conditions and ailments not requiring hospitalization were furnished through a community pharmacy selected by the veteran beneficiary. Pharmacies provided the drugs free of cost to the veteran and were reimbursed by the VA. This program worked well to the apparent satisfaction of the VA, veteran beneficiaries and pharmacists. In the years immediately following World War II, VA lacked the facilities and staff to meet the very large need for pharmaceutical services and, of necessity, had to utilize and rely upon the Hometown Pharmacy Program to meet its responsibilities.

The exact timing of the policy change is not known, but in the late 1950's, as VA facilities and staff became available, VA gradually increased the percentage of pharmaceutical services provided veterans from VA's own facilities. However, the clear turning point was in 1963 when the Government Accounting Office published a report claiming that the VA could achieve significant economies and cost reductions by supplying medication to veterans by mail from its own facilities. From that time to the present, the policy has become more entrenched, and the number of prescriptions dispensed for veterans by private pharmacies has steadily declined both in absolute terms and as a percentage of the total, increasingly large VA volume.

Today, private pharmacies are limited to prescriptions written under emergency conditions for veterans where immediate medication is necessary and a VA facility is not available, either because of distance or because of time (e.g., other than 9 to 5, Monday through Friday). And even then, the veteran is limited to a "one time only" benefit from the private pharmacy; that is, the initial medication to carry him through until the VA can take over the medication supply function.

The GAO cost figures were disputed in 1963 when they were first announced. But even if we assume that the 1963 comparison of VA per-prescription charge figures with those of community pharmacies were valid then, it does not follow that they are valid today. Quite the contrary. There are significant factors which suggest that differences in comparative costs today would not be significant.

There have been dramatic changes in the prescription drug market since 1963 and in the comparative costs of drugs to pharmacies versus the costs to the VA. Alternatives are available to community pharmacies today that were not practical 10 or 15 years ago.

One of the major cost saving factors in the GAO report in 1963 was the large differential in product acquisition cost between the prices the government paid for drugs when compared to the costs community pharmacies paid. In that period, it was not uncommon but more the rule that a drug with a wholesale cost to community pharmacies of $30.00 per 100 would be purchased at a government price from the same manufacturer by VA for $3.00 per 100. More recent figures suggest that government still enjoys a substantial discount from wholesale costs of an identical product. However, what may not be apparent is that pharmacists now have lower cost alternatives which, in many instances, approximate the government purchase cost figures.

Information developed over the last decade or more has brought on a cost consciousness in health care in our society. Drugs, whose protective patents have expired, are now frequently available from multiple sources, and drugs produced in the past by a single source now are available from additional sources at more competitive prices. We have learned more about and have gained greater confidence in the quality and integrity of the prescription drug supply in this country. Prescribers are more willing today to prescribe generically, or to prescribe lower cost alternative drug therapy for private patients, or to leave the selection of the actual source of drug therapy to the pharmacist.

We sincerely believe the product cost differential that GAO found significant in the VA-community pharmacy comparison in 1963 is no longer valid, and no

longer justifies the continuation of the VA drug-by-mail-only program which it inspired more than a dozen years ago.

Further, when it comes to cost, NARD is confident that if all VA costs of providing mail order prescriptions were fully allocated in determining the costs per prescription to VA, VA's costs would not vary significantly from those experienced by community pharmacies. Historically, the VA data has been based upon direct incremental costs of providing the additional service. We submit that this is not only improper but invalid in determining the true VA costs incurred. We cannot subscribe to the view often advanced by VA that since it must provide pharmaceutical services in its facilities, the drug-by-mail program does not generate any additional expenses for personnel, overhead, administration, light, power, etc. VA is dispensing in excess of 12 million prescriptions annually-a volume that has increased four or five-fold in the last decade. We have had reports that some facilities are so taxed that volunteer assistance is required to maintain the drug mailing schedules at any reasonably adequate level. To state the facts seems to us to reveal just how preposterous the VA claim is.

Actually, we would welcome a comparison of a random sample of VA dispensed prescriptions on a fully allocated cost basis between charges incurred by VA and those of a community pharmacy. We believe that the results would be more than revealing and point up the absurdity of the continued claim of any real economic savings from the present policy.

It is significant, we believe, that Congress insisted that the "freedom of choice" concept be an integral part of the Medicare and Medicaid programs. Certainly, as a nation we spend many, many times more tax dollars for drug therapy through the Medicaid program than the VA spends for veterans. Yet, the poorest non-veteran citizen is entitled to free choice in pharmacy under Medicaid as a matter of federal policy.

The VA drugs-by-mail policy points up the wisdom of this Congressional insistence on the free choice concept in governmentally financed health care programs. A Medicaid recipient has the same right as a self-paying patient to choose the pharmacy that serves his needs best, responds to his requests and provides him with the best and most prompt service. If one pharmacy fails to meet the Medicaid recipient's expectations, then he is free to choose another, which means that the provider must treat the patient with the same compassion and courtesy as any self-paying patient. There is no "welfare" treatment of any individual simply because the government is footing the bill.

However, the veteran must accept the VA mail order prescription program whether he likes it or not, whether it meets his needs or not, whether it is convenient or not, or whether it is a quality program or service. The only alternative is to forego the benefit altogether. And it is this issue that H.R. 3349 addresses and seeks to change.

Current health care literature abounds with discussions of the importancee of drug therapy monitoring and of drug interactions (with prescribed drugs and non-prescription medication). While the bureaucratic empire builders at VA may maintain medication profiles for the medication VA dispenses, the community pharmacist who must serve the balance of the prescribed and nonprescribed medication needs of the veteran has no idea of the total medication regimen of these veteran patients. Similarly, the VA cannot know what prescribed and nonprescribed medication is being concurrently administered to the veteran patient. The veteran might choose this situation, though we doubt it, but at least it would be a circumstance of his own choosing rather than the result of VA compulsion.

NARD maintains that neither the VA nor any other group can provide adequate pharmaceutical services by mail. Our position is inherently self-evident in light of the foregoing necessity for monitoring the complete medication regimen of patients. And when further drug therapy is required under emergency conditions to treat acute or emergency conditions, the patient medication records for veterans may be miles away in a facility that is closed for the night or the weekend. Additionally, any questions the veteran may have about taking the medication can only be satisfactorily answered in a face-to-face encounter. Apart from the economics and the important health care considerations already mentioned, consider the inconvenience and delay. Our current postal service is not noted for its timeliness and certainly postal expenses are escalating for the VA mail order program. A prescription mailed from the veteran to the VA and