Bush Administration Officials Reject Calls To Revise New Medicare Prescription Drug Benefit

Bush administration officials on Wednesday "rebutted claims" that legalizing prescription drug reimportation and allowing the federal government to negotiate directly with pharmaceutical companies would lower the cost of the new Medicare prescription drug benefit, the Washington Post reports.

On Tuesday, Sen. Edward Kennedy (D-Mass.) and Rep. Henry Waxman (D-Calif.) wrote to President Bush suggesting that Medicare could save $190 billion over the next 10 years if the program adopted the same price-negotiating system used by the Department of Veterans Affairs. Kennedy said, "It is serious business, and it's time the administration got serious about helping senior citizens get affordable drugs instead of helping drug companies achieve windfall profits."

In addition, during hearings on Wednesday, some senators "vented their frustration about the growing price tag" for the drug benefit, the Post reports (Connolly, Washington Post, 2/17). At a Senate Finance Committee hearing on Wednesday, Sen. Ron Wyden (D-Ore.) said, "We're going to be spending a boatload of money on a relatively small number of people" (Rovner, CongressDaily, 2/17).

However, referring to a memo from Medicare Chief Actuary Richard Foster, CMS Administrator Mark McClellan said that the Bush administration believes the involvement of more private health plans and pharmacy benefit managers in Medicare will result in lower medication prices (Washington Post, 2/17).

In the memo, Foster said that allowing the federal government to negotiate with pharmaceutical companies would mean that Medicare could "virtually dictate price levels to manufacturers and retail pharmacies," which in theory "could result in very large discounts." The memo continued, "In practice, however, it is not clear that manufacturers and pharmacies would be willing to sell prescription drugs at very low prices mandated in this fashion. Moreover, we do not believe that the current administration or future ones would be willing and able to impose price concessions that significantly exceed those that would be achieved in a competitive market."

McClellan said that he agrees with Foster's assessment, adding, "Past experience of Medicare negotiating drug prices has not been reassuring" (Rovner, CongressDaily, 2/17).

At a separate hearing, Surgeon General Richard Carmona "confronted mounting pressure from Republicans and Democrats" to allow the reimportation of prescription drugs from abroad in light of the new Medicare drug benefit cost estimates, the Post reports.

Sen. Byron Dorgan (D-N.D.), co-sponsor of a bill to legalize reimportation, said, "The drug benefit in the Medicare bill has now ballooned to hundreds of billions of dollars more than previously disclosed. With that kind of pressure, everybody understands you've got to put downward pressure on prices" (Washington Post, 2/17).

Senate Finance Committee Chair Chuck Grassley (R-Iowa) said that he will "not support re-opening the drug benefit for changes that will undermine the program even before it is implemented." He added that Medicare beneficiaries "surely waited long enough for Medicare to provide prescription drug coverage without Congress threatening to cap the program or prevent implementation by making changes that would make the January 2006 start date unachievable."

CongressDaily reports that last week, Senate Budget Committee Chair Judd Gregg (R-N.H.) said the cost of the new Medicare law should be kept to the original 10-year, $400 billion projection.

Sen. Max Baucus (D-Mont.) on Wednesday said that he believes the "controversy over the latest estimates is, at best, overblown," adding, "The main story is that instead of counting eight years of drug benefits, we're counting 10."

HHS Secretary Mike Leavitt added that "it's simply not true" that estimates for the drug benefit have increased (Rovner, CongressDaily, 2/16).

In related news, Sens. Chris Dodd (D-Conn.) and Jim Bunning (R-Ky.) this week introduced a bill that would require Medicare to cover most beneficiaries' ultrasound screenings for abdominal aortic aneurysms. According to the Wall Street Journal, at least 15,000 U.S. residents die annually from ruptured aortic aneurysms, which are "easy to find" with a highly accurate ultrasound test and relatively easy to treat if discovered early enough.

Under the proposed legislation, specific categories of older men and women -- including those with family histories of aortic aneurysm, cardiovascular risk factors or atherosclerotic disease -- would be eligible under Medicare to receive screenings for the condition. The Journal reports that the bill "is expected to gain impetus" after the U.S. Preventive Services Task Force recently endorsed the screenings (Burton, Wall Street Journal, 2/17).

NBR on Wednesday reported on the future of Medicare, and included comments from Gail Wilensky, a senior fellow at Project Hope, Dr. Marcia Gomez, a medical director of health services at Humana, Marsha Gold, a senior fellow at the Mathematica Policy Research, and retirees (Yastine, NBR, 2/16). The complete transcript is available online.

In addition, WAMU's "The Diane Rehm Show" on Wednesday discussed Medicare changes, and included comments from Joseph Antos, a health care and retirement policy scholar at the American Enterprise Institute for Public Policy Research, Leslie Norwalk, deputy administrator of CMS and Ron Pollack, president of Families USA (Rehm, "The Diane Rehm Show," WAMU, 2/16). The complete segment is available online in RealPlayer.