Report From Congress

REPORT FROM CONGRESS

WICKER: NEW MEDICARE DRUG BILL WON'T PRODUCE SAVINGS

The Democratic majority in the House of Representatives recently pushed through a bill directing the government to negotiate prescription prices with drug companies participating in the Medicare Part D program. While it was touted as a way to lower drug costs for senior citizens, the plan is likely to produce little savings and could limit medication choices available to seniors today.

I opposed the legislation and concur with one of my Republican colleagues who called it a solution in search of a problem. That is because the Medicare Modernization Act Congress enacted two years ago has been remarkably successful. More than 39 million Americans have prescription drug coverage today thanks to this program.

COMPETITION SAVES $$

The current average premium for senior citizens with Part D coverage is $22, and seniors are saving $1,200 per year on their medication. Using the power of competition, substantial savings were achieved in the first year of the Part D program with even more dramatic savings projected over the next 10 years. Public opinion polls indicate that 80 percent of Part D beneficiaries are satisfied with their drug plans.

Democrat claims of greater savings under their bill were contradicted by the Congressional Budget Office (CBO) in a letter released on January 10. Experts at the non-partisan CBO concluded it would produce negligible savings. Even the reliably-liberal Washington Post concurred in an editorial, saying the plan was "misguided" and suggesting Democrats were "too optimistic about government regulation and too pessimistic about the current system."

CONCERNS ABOUT DRUG AVAILABILITY

I fear this bill could reduce the availability of drugs for Medicare beneficiaries. It would employ the same drug price negotiating model used by the Medicaid program and the Department of Veterans Affairs. The problem is that veterans have access to fewer than one-third of the drugs available under Medicare Part D. State Medicaid programs also routinely limit the number and types of drugs their patients can receive. The VA receives a 24 percent discount by law to serve its 4.4 million beneficiaries. If the system were expanded to cover all 39 million Medicare enrollees, drug companies would be forced to raise prices and limit choices for all government recipients.

Another troubling aspect of this plan is the possibility of restricting senior citizens' interaction with their community pharmacists. The VA's drug program is one-tenth the size of Medicare, and 70 percent of its medications are delivered by mail. By contrast, Medicare uses the mail to deliver only about two percent of its drugs. Expansion of the mail-order component of the program would deny many seniors the chance to deal with their local pharmacists.

GOP SAFEGUARDS REJECTED

Republicans sought to add a provision ensuring that no one would lose access to life-saving medications currently available to them under Part D. That motion also included a provision allowing senior citizens to retain access to chain and community pharmacies. The motion was defeated, however.

The bill is a long way from becoming law. It faces an uncertain future in the Senate, and President Bush has promised a veto if it reaches his desk.

http://www.house.gov/wicker/medbill.htm