Letson gazes into his crystal ball: What’s up for neb meds in 2005?

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Saturday, July 31, 2004

I have spent a great deal of time analyzing the nebulizer medications market for 2005 and have come up with two conclusions. 1.There is a God that knows everything. 2. I am not him. Let’s take a look at what I do know and think at this time.

It’s an Election Year

In an election year, it is not good politics to mess with the Presidents strongest campaign tactic: THE MEDICARE PRESCRIPTION DRUG ACT. This will likely be President Bush’s number one promotion as we move towards the election. President Bush will have to have something to offset Iraq, so look for him to spend time talking about the act’s benefits to Medicare recipients. (If we see any program changes, do not look for them until after the election, which will be too late to wait for large or national providers.) With customer bases in the hundreds of thousands, national providers will have to make a move prior to November to protect their pockets and patients.

Possible Delay

There are those who say that a delay in implementation is imminent. “No one can provide nebulizer medications at that cost plus 6%,” they say. “This will create access problems.” A delay is possible, but I doubt that it would offer as much hope as some type of solution to the larger problem. Remember, it has only been a few months since the industry was faced with a 15% cut. Everyone went right by the cut and started talking about 2005 and ASP plus 6%. Any delay would only start the process over again and create even more speculation about what next year’s pricing might be.

A Service Compensation

Of all of the rumors that I have heard, this one seems to offer the most hope. This is an election year and President Bush and his healthcare team do not want to hear the words “ACCESS PROBLEM” associated with such a small part of a very large law. Especially one that he will lean heavily on to get re-elected. Democratic challenger John Kerry, on the other hand, would love to cry “ACCESS PROBLEM” to the voting public. An access problem on such a small piece of this huge legislation could mean that more and larger access problems are on the way with the full program. If Mr. Kerry is able to poke any holes in the Medicare Prescription Drug Act, he stands to lure the older Americans away from the Bush camp. Look for a negotiated services component of $30-$50 should providers win on this issue.

ASP Plus 6% on Jan. 1, 2005

The smart provider that studies the true meaning of ASP plus 6% stands to gain big. ASP does not stand for your cost plus 6%, it stands for the Average Selling Price plus 6%. This means that all pharmacies that purchase these products are factored in. Remember that Xopenex costs the average provider substantially more than albuterol and is reimbursed the same. If Xopenex is not separated from the albuterol billing code, it will drastically increase reimbursement. If it is separated, there may be an opportunity at that point to supply Xopenex at a more profitable rate than albuterol. This is just one example of the possible benefits to ASP plus 6%.

As has always been the case, the smart provider always wins in a Medicare change. Either be a smart provider or align yourself with a supplier/vendor that is smart. Stay tuned, this soap opera is likely to take several twists between now and January 1, 2005.

Mickey Letson is president of Letco Medical, a wholesale drug and compounding supply company that also teaches DME dealers how to open respiratory pharmacies.

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