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Heat Building from Grassroots for Negotiated Prices
on Medicare Drugs
San Antonio Newspaper, Consumers Union urge
seniors to act
 July 7, 2005 – In an editorial entitled “Congress
Inhibiting Medicare’s Influence,” the San Antonio Express-News today
joined Consumers Union and others in blasting Congress for not allowing
Medicare to negotiate drug prices for senior citizens in the new
Medicare drug plan that becomes effective in January.
“A new Congressional Budget Office study shows how
lawmakers can save billions of dollars in Medicare costs next year,” the
editorial said. “The only problem is that Congress will have to place
the interests of taxpayers and seniors ahead of the deep-pocketed,
campaign contribution-giving pharmaceutical industry.”
“How likely is that? Not very,” the paper said.
“But the study showed that large federal
departments that use their mass buying power to negotiate prescription
drug prices for their employees pay an average of 49 percent of the
typical wholesale price,” they said.
The reference was to a CBO study released in June
that shows the dramatic savings the government – and taxpayers – could
achieve in the planned Medicare prescription drug program if Congress
required government negotiation of drug prices with the pharmaceutical
industry
The CBO study found that the six federal programs
that currently negotiate prices with manufacturers pay about half of the
average wholesale price (which the CBO describes as “the list price”)
for drugs. The Department of Defense was found to negotiate the lowest
prices – about 41 percent of the average wholesale price for brand-name
drugs.
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The Medicare prescription drug program is set to be
fully operational next year at a cost of about $72 billion a year.
“But because Congress prohibited Medicare from
using its buying clout to negotiate better wholesale prices, taxpayers
and Medicare users will be paying twice as much as necessary for the
program,” said the Express-News.
“Editorial writers overuse such words as
‘outrageous,’ but it is justified in this instance.”
The newspaper quoted Consumers Union policy analyst
Bill Vaughan who said, "This report proves the government can save money
on prescription drugs. The question is why aren't we doing it for
Medicare beneficiaries."
“This clearly shows the staggering amount taxpayers
would save if Congress required negotiation of drug prices in the
Medicare program,” said Vaughan, senior policy analyst for the
Washington Office of Consumers Union. “Why shouldn’t we save the same
money on medicines for our seniors that we now save for veterans and the
military?”
The CBO report, requested by Sen. Bill Frist
(R-TN), found that the price negotiated by the Department of Veterans
Affairs for the “Big Four” – the VA, Department of Defense, the Public
Health Service and the Coast Guard -- is only 49 percent of the list
price for sales of a drug by a wholesaler to a pharmacy. The VA and the
DOD further negotiate price reductions that result in average prices of
42 and 41 percent, respectively, of the average wholesale price.
In passing the Medicare drug benefit, Congress
specifically prohibited federal government negotiation of drug prices
with manufacturers. Some members have since introduced legislation to
require negotiation like that done by the VA, but the bills have not yet
been considered. The Medicare drug benefit is scheduled to go into
effect in January at an average cost of $72 billion per year.
Medicare discount drug cards have provided
discounts to those who have enrolled that are modest when compared with
the deep discounts achieved by the VA, according to Consumers Union.
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Prescription drug plans under Medicare Part D, due
to provide benefits beginning January 1, 2006, are likely to provide
some discounts as well. Yet it is clear from the CBO report that the VA
and DOD approaches to negotiating deep discounts should set the standard
for the public to judge the level of financial relief achieved by the
new program.
“Time is running out for Congress to save our
seniors and taxpayers billions of dollars each year by negotiating
prices with the drug companies,” Vaughan said. “This report proves the
government can save money on prescription drugs. The question is why we
aren’t doing it for Medicare beneficiaries.”
“Congress should change the law before billions of
dollars start flowing to drug companies as excess profits,” concluded
the newspaper editorial.
The San Antonio newspaper, too, urged readers to
contact their senators and congressional representatives and ask them to
fix this problem. “As with most injustices, only a loud chorus of
complaints can puncture the armor of bad public policy.”
To read the complete editorial –
click here
To view the CBO report, go to
http://www.cbo.gov/ftpdocs/64xx/doc6481/06-16-PrescriptDrug.pdf.
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