Statement of Jim Tozzi, President, Multinational Business Services, Inc., on: the Clinton Administration's Prescription Drug Proposal September 13, 2000

I am Jim Tozzi of Multinational Business Services, Inc. ("MBS"). MBS is a regulatory consulting firm. Prior to starting MBS, I worked for five presidential Administrations. During four of those Administrations, I worked for the White House's Office of Management and Budget, including a position as the career chief of regulatory review.

We were asked by PhRMA to review the Clinton Plan on prescription drugs to assess and delineate the magnitude of new government controls the Plan would impose. By "government control," I mean a directive by the Federal Government for someone to do something they normally would not be required to do.

Presently, there are no government controls under Medicare on how, when, and where a member of the public may purchase a prescription drug on an outpatient basis.

The Clinton Plan comprises 182 new government controls on a wide range of parties, including:

• HCFA

• Benefit Managers

• Pharmacies

• States

These 182 government controls include:

• Establishing at least 15 monopolies in 15 regions designated by HCFA throughout the nation, and

• Establishing a massive regulatory program to prohibit the 15 benefit-manager monopolies from releasing or selling data on individual consumers.

• One picture is worth a thousand words. Now let us discuss the chart we prepared.

• The chart shows 182 new government controls imposed by the Clinton Plan.

• Based on who would be responsible for complying with the new requirements, each of these 182 new requirements has been classified in terms of the responsible party.

  For example, mandates on HCFA are in orange; those imposed on Benefit Managers are in green, and those on pharmacies are in blue.

• Clearly, upon examining this chart, one will first note that a large number of government control actions would have to take place in a coordinated fashion before the system could go into operation.

• Second, the complexity of the system demonstrates that even if it were adopted, it would take a number of years before the system could be operating. During that transitional period, the availability of prescription drugs would be in jeopardy.

• And finally, even if the plan were ever to get up and operating, the interrelationships between a large number of new players are such that it would result in many disputes that would take time to resolve and in many instances result in costly and delaying litigation.

Where does this leave us? The Clinton Plan would necessitate establishing a massive regulatory regime which would:

• Come between the patient and the prescription drug,

• Double HCFA's transaction load, despite the fact that HCFA presently has difficulty in handling its existing Medicare caseload and in meeting its current statutory responsibilities, and

• As a result of the large number of new players in the system, result in a wide range of conflicts, the resolution of which would take time, lead to delays in the delivery of prescription drugs and in large-scale litigation.