DRUG COVERAGE: Industry Faces New Realities
A front page piece in today's Wall Street Journal examines the pharmaceutical industry's apparent change of heart on Medicare coverage of prescription drugs for seniors. The industry released a "carefully crafted statement" yesterday after months of internal wrangling that said it "now supports" the inclusion of a drug benefit in Medicare, but only if seniors receive the coverage from managed care plans under a reformed premium-support Medicare program. The statement read: "The federal government would make a financial contribution to help Medicare beneficiaries purchase a health plan; beneficiaries would be free to select from a range of private-sector options the plan that best satisfies their individual needs. The Journal reports the industry believes the increased drug usage that typically occurs under managed care plans would offset any discounting of drug prices.
The pharmaceutical industry has been under pressure to acquiesce to drug coverage for seniors, a move it has long opposed for "fear that price controls would inevitably result" --and spread to the non-Medicare sector. What's more, the industry fears the same kind of demonization that befell the tobacco industry if it does not recognize the reality that it "can no longer block all Medicare coverage of outpatient drugs without provoking the ire of the American public." However, Washington insiders were not unanimous in the meaning of the industry's softening its position. "It sounds like a group got together and argued about wording and didn't want to appear to be recalcitrant or standing in the way of progress, and this was the lowest common denominator," said former CBO Director Robert Reischauer. American Association of Retired Persons lobbyist Martin Corry said, "This is hardly a breakthrough by any means. But the fact they are even discussing it may indicate that there's room for constructive dialogue" (Lagnado/McGinley/Tanouye, 2/19).
An Insider's Game
Today's Journal also profiles the efforts of Medbank, a charity that "help[s] people who can't afford the high price of medicine," run by Herb McKenzie, former president of Sterling Winthrop Inc.'s consumer health group. Drug companies offered to set up consumer assistance programs in 1992 in return for Congress backing off its "threats to regulate drug prices." The Journal reports that "Medbank's mission is to systematically ransack" such programs, which many charge "remain unwieldy and underpublicized, with each drug company operating its own program under daunting layers of red tape." Medbank "wheedled $1 million in free drugs" from pharmaceutical companies last year alone. McKenzie said, "We didn't invent the system. We are simply taking advantage of it." He notes that the industry has turned a deaf ear to his pleas to rationalize the system. The Pharmaceutical Research and Manufacturers of America counters that "[a]ntitrust considerations preclude the group from centralizing its efforts" (Lagando, 2/19).