December 22, 2004
BB 04—129

In this issue:

  • HHS Task Force on Drug Importation Issues Report: Any Safe System of Importation Would Likely Produce Only Modest Savings
  • DOL Addresses Directed Trustee Responsibilities

HHS Task Force on Drug Importation Issues Report: Any Safe System of Importation Would Likely Produce Only Modest Savings

The Medicare Modernization Act (MMA) signed into law by President Bush in 2003 required the Secretary of Health and Human Services (HHS) to conduct a study on the importation of drugs and report the findings to Congress. On December 21, the HHS Task Force issued its report and concluded that the overall national savings from establishing legalized commercial importation of prescription drugs would likely be a small percentage of total drug spending. The report says that developing and implementing a system to ensure the safety of the drugs would require significant federal spending and importing drugs may not necessarily be less expensive than other alternatives already available to consumers. For example, the task force specifically recommended that the public "shop around for price comparisons" and ask their physicians and pharmacists about generic alternatives. In addition, those with access to a Medicare or other prescription drug discount cards should use their cards to obtain savings. The task force said these are "proven" methods to save money and retain the safety features of our current system.

The task force also predicted that legalized importation would likely adversely affect the development of new drugs and raised concerns about enforcement of intellectual property rights and liability issues for entities in the pharmaceutical supply chain who import drugs that harm consumers. Members of the Bush Administration have written a letter to the Speaker of the House of Representatives to transmit the report.

Proponents of legislation to permit the importation of prescription drugs will likely renew their efforts at the start of the 109th Congress. Former Utah Governor and current Administrator of the Environmental Protection Agency (EPA) Michael Leavitt, who has been nominated to succeed HHS Secretary Tommy Thompson, will likely face questioning on the issue of importation during his confirmation hearings in the Senate.

For more information contact Maria Ghazal, Council director, health policy, at (202) 289-6700.

DOL Addresses Directed Trustee Responsibilities

On December 17, the Department of Labor's (DOL's) Employee Benefits Security Administration (EBSA) provided guidance to field investigators on the responsibilities of directed trustees under the Employee Retirement Income Security Act (ERISA) with respect to publicly traded securities (employer securities purchased or held in qualified retirement plans). Although the DOL declared that directed trustees are fiduciaries under ERISA with a duty to act prudently, the DOL indicated that the directed trustee would rarely need to question the directing fiduciary's instructions regarding transactions involving publicly traded securities.

Field Assistance Bulletin (FAB) 2004-3 was a response to an advisory opinion request filed by Groom Law Group on behalf of several clients. On July 15, 2004, the Council sent a letter to the DOL supporting limitations on the duties for directed trustees.

A more detailed summary of this issue is available on the Council Web site. For more information, contact Jan Jacobson, Council director, retirement policy, at (202) 289-6700.

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The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council's members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.