Tripartisan Group of Senators To Introduce Stand-Alone Medicare Rx Drug Benefit

A group of senators is preparing to introduce legislation that would create a stand-alone prescription drug benefit for seniors and a new program "designed to close gaps" in fee-for-service Medicare coverage, the AP/Baltimore Sun reports. The proposal, called the "Option for Enhanced Medicare Benefits," could reach the Senate floor as early as next week and comes from the so-called Tripartisan Group, which includes Sens. Charles Grassley (R-Iowa), Olympia Snowe (R-Maine), Orrin Hatch (R-Utah), John Breaux (D-La.) and James Jeffords (I-Vt.). The prescription drug benefit would "generally follow" a plan passed by the House last month that would allow seniors to purchase drug-only coverage from private insurance companies (AP/Baltimore Sun, 7/10). Under the House plan, seniors would pay a $250 annual deductible and a $33 monthly premium. Low-income seniors would be exempt from the premiums and deductible. The federal government would cover 80% of seniors' annual prescription drug costs up to $1,000, 50% up to $2,000 and no costs between $2,000 and $3,700, after which a catastrophic benefit would begin (California Healthline, 6/28).

Under the tripartisan plan, which would cost about $330 billion over the next 10 years, seniors would pay a monthly premium less than $30 and a $250 annual deductible, after which the government would cover 50% of annual drug costs up to $2,000. Further, the government would cover at least 90% of annual out-of-pocket expenses greater than $3,700. The plan would fully subsidize monthly premiums for low-income beneficiaries and would cover 95% of their drug costs up to $2,500 or $3,000, 50% up to $3,700 and all costs above $3,700. The tripartisan proposal is a "less costly alternative" to prescription drug benefit legislation proposed by Sens. Bob Graham (D-Fla.) and Zell Miller (D-Ga.), which is estimated to cost $500 billion over the next eight years. Another part of the tripartisan legislation would allow seniors to enroll in a health plan that offers coverage for hospital stays and "other services," including doctor visits, for a single annual deductible of "a few hundred dollars." Traditional Medicare beneficiaries pay an $812 deductible for each hospital stay and a $100 annual deductible for other services (AP/Baltimore Sun, 7/10).

Bills that would allow drug reimportation from Canada and ease market entry of generic medications could "dominate" the Senate's consideration of Medicare drug benefit proposals next week, CongressDaily/AM reports (Fulton, CongressDaily/AM, 7/10). Although both the Clinton and Bush administrations refused to implement drug reimportation legislation passed by Congress in 2000, Senate Democrats are "pushing" a new reimportation bill. Yesterday, William Hubbard, an FDA senior associate commissioner, told the Senate Special Committee on Aging that allowing reimportation of U.S.-made drugs from Canada, where medications are sometimes 60% less expensive, would "encourage unscrupulous individuals to devise schemes [to reimport] dangerous products from all points around the globe." Breaux added, "Without our domestic safety net to ensure the integrity of these pharmaceuticals, consumers simply do not know what medicine they are buying" (Carter, AP/South Florida Sun-Sentinel, 7/9). A different proposal by Sens. John McCain (R-Ariz.) and Charles Schumer (D-N.Y.) would "eliminate current legal 'perks'" given to brand-name and generic drug makers that delay the production of generic drugs. The bill, which the Senate Health, Education, Labor and Pensions Committee expects to mark up today, would also "codify FDA's definition of when a generic is deemed equivalent to a brand-name drug" (CongressDaily/AM, 7/10).