Congress debates drug benefit for seniors

April 1, 1999

Pharmaceutical Representative

Legislators returned to Washington to debate issues of public policy, including a proposal to provide a low-cost drug benefit for Medicare beneficiaries.

With the president's impeachment behind them, legislators returned to Washington to debate issues of public policy, including a proposal to provide a low-cost drug benefit for Medicare beneficiaries.

Lack of prescription drug coverage is an often-criticized flaw of Medicare. Senior citizens are the recipients of roughly 40% of all prescriptions in the United States, but they receive few, if any, breaks on the costs of filling those prescriptions.

Sen. John Breaux (D-LA) has presented a plan that would attempt to address that problem. Breaux, the chairman of the National Bipartisan Commission on the Future of Medicare, proposes allowing more private health care plans to participate in Medicare and granting senior citizens government-subsidized premium support which they could apply toward participation in a health plan that provides prescription drug coverage. Breaux's premise is that greater competition among private health care plans will lower the overall costs of Medicare.

In early February, Breaux submitted his proposal to the Congressional Budget Office for review. On Feb. 18, the office responded that it needed more details in order to evaluate long-term savings. They promised to review it again on Feb. 24. Analysis by the National Bipartisan Commission on the Future of Medicare suggested that the plan could reduce Medicare spending by 25% by 2030.

Breaux's plan received cautious support from the pharmaceutical industry. Jeff Trewhitt, spokesperson for Pharmaceutical Research and Manufacturers of America, the industry's Washington-based lobbying arm, said: "This Senate bill - although not perfect - makes sense. It seems to be a legitimate approach to processing 300 million claims per year."

This stance was in stark contrast to the association's reaction to The Prescription Drug Fairness Act for Seniors, a bill drafted by Rep. Tom Allen (D-ME.)

Allen's bill proposed that the government require pharmaceutical companies to sell medicines to seniors at prices similar to those pitched to the manufacturers' favored buyers, such as health maintenance organizations and the federal government. Typically, those prices are about half as much as retail.

PhRMA and numerous patient advocacy associations shot down Allen's bill immediately, complaining that government price controls would hurt the research and development of new medicines. Also, PhRMA said, the bill guarantees lower prices to pharmacies and assumes that those savings would be passed on to senior citizens, but the bill does not guarantee it.

"We have always said there is a right way to do something and a wrong way to something," Trewhitt said. "We acknowledge that there is a problem and that there are ways to resolve it, but a mandatory program with mandatory price rebates is not the way to do it."

Breaux's plan, on the other hand, leaves pricing control to the competitive health care marketplace, a fact not lost on or unappreciated by pharmaceutical companies.

"The market does emphasize cost containment and discounts, but these things are negotiated," said Trewhitt. "When a company argues the benefits of putting drugs on formularies, they can argue the research and development costs."

Consumers support industry

The research and development card is one that apparently has high value with consumers and patient advocacy groups, as well as with PhRMA. The Seniors Coalition, based in Fairfax, VA, said "the pharmaceutical industry has made available contributions to enhance the quality of life and protect patients from needless pain and suffering," and warned that other countries that had experimented with price control "literally stifled innovation to encourage innovation and research into new drug therapies."

The Cancer Research Foundation of America, the Kidney Cancer Association, the International Patient Advocacy Association and the Healthcare Leadership Council also chimed in that they opposed any legislation imposing price controls that would slow research and development efforts.

"For centuries, governments have imposed price controls with the same good intentions: protecting consumers," said Pamela Bailey, president of the Healthcare Leadership Council. "And for centuries, price controls have had the same dismal results: shortages, rationing, fewer consumer choices, less innovation and lower quality."

"Government price controls over pharmaceuticals were soundly defeated when part of the Clinton health plan in 1993," Bailey added. "They should be soundly rejected now, as well." PR

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