By Lisa Seachrist
WASHINGTON ¿ With Congress set to consider adding a drug benefit to the Medicare program, the pharmaceutical and biotechnology industries are looking to frame the debate in a way that doesn¿t set industry against senior citizens.
At the same time, the industries want to ensure that providing a drug benefit to the nation¿s near-poor seniors does not come at the expense of innovation, by creating drug price controls.
¿We want to urge most strenuously that Congress do nothing that smacks of drug price controls,¿ said Carl Feldbaum, president of the Biotechnology Industry Organization (BIO). ¿When the baby boomers reach Medicare age, around 2010, we want the arsenal of new drugs and therapies that promise to come forth to be available to them.¿
When Medicare was established more than 30 years ago, prescription medicines were of only limited value in treating chronic disease. Now, however, prescription medicines provide a means to reduce the likelihood that a person will spend time in the hospital or to reduce the length of the stay. About two-thirds of Medicare beneficiaries have drug benefit coverage through a Medigap policy they have purchased. However, one-third of all seniors don¿t have enough money to pay for such coverage, and often don¿t have enough money to purchase the drugs outright.
As the population ages, Congress is looking for a means to update Medicare coverage without breaking the bank.
The issue is beginning to heat up, as Rep. Tom Allen (D-Me.) has introduced a measure to provide some form of drug benefit to Medicare recipients. The National Bipartisan Commission on the Future of Medicare, which was due to deliver its report on March 1, is expected to weigh in on the subject by the end of the month, when its statutory funding runs out. Sen. Edward Kennedy (D-Mass.) and Rep. Pete Stark (D-Calif.) are looking to introduce drug benefit legislation in their respective chambers of Congress.
As the issue begins to gel, BIO and the Pharmaceutical Research and Manufacturers of America (PhRMA) are pointing out that, because the cost of developing a new drug runs from $300 million to $500 million, price controls will stymie the development of the blockbuster new drugs that biotechnology and pharmaceutical companies have in their pipelines.
¿We acknowledge that there is a societal problem that has to be dealt with,¿ said Jeff Trewhitt, media spokesman for PhRMA. ¿But we are in favor of using private sector health-care plans, with government-funded premium support, to address the issue, not price controls.¿
BIO Yet To Decide On Medigap
Allen¿s bill is a form of price control that would allow pharmacies to purchase drugs for Medicare beneficiaries under the federal schedule rate, which mandates at least a 24 percent discount for the drugs. His bill, however, fails to require that the pharmacies pass the discount onto Medicare beneficiaries. In addition, should Allen¿s bill pass, 40 percent of all pharmaceuticals will fall under some sort of price control.
¿For the near-poor seniors who aren¿t covered by Medigap policies, a 24 percent to 30 percent discount on a drug that costs $100 a month won¿t solve the problem,¿ Trewhitt said. ¿That is still too much money for them to pay.¿
While PhRMA supports the idea that the federal government provide a fund that will offer premium support for private sector Medigap policies to needy seniors, BIO has yet to weigh in on subject.
¿We haven¿t endorsed the idea, nor have we decided against,¿ Feldbaum said. ¿We will weigh carefully any recommendations from the Bipartisan Commission and any legislation introduced. We are very wary of any quick fixes. Modernization of Medicare may not happen this year.¿
If it doesn¿t happen this year, the states may decide to take the issue into their own hands, Trewhitt noted.
¿Because the state legislatures don¿t see anything happening in Congress, they may introduce price-control legislation of their own,¿ Trewhitt said. ¿They are getting an earful from very vocal constituents, [and] that may be hard to fight.¿ n