WASHINGTON _ In the eyes of biotechnology industry lobbyistshere, many of the flaws in the health care reform bill introduced bySenate Majority Leader George Mitchell (D-Maine) reside in the fineprint of the legislation's new Medicare outpatient prescription drugbenefit.Since prescription drugs are the largest single out-of-pocket medicalexpense for three out of four older Americans, some have reasoned thata Medicare drug benefit could blunt criticism of high-priced drugs.Further, some experts believe the benefit could slightly expand themarket for drugs, a phenomenon known as "induced demand."But, despite these two potential benefits of a Medicare drug benefit, thebiotechnology industry has eyed the prospect uneasily. Why? Becausesome cost-conscious politicians believe that a government-deliveredbenefit must be accompanied by effective cost controls. Thus thebiotechnology industry scours each new health care bill's Medicareoutpatient drug benefit for the three dreaded C's _ commissions,councils or committees to review the price of drugs _ and otherthreats.Mitchell's bill serves as a case study of how suspicious-lookinglanguage can slip stealthily into a Medicare prescription drug benefitprogram, according to industry advocates. BioWorld spoke to severalbiotech lobbyists to compile a list of provisions that they regard assuspect. (See the accompanying box, beginning on p. 1.)"They are adding drug coverage to Medicare while decreasingspending _ not the most obvious combination," Gail Wilensky, formerdirector of Medicare and Medicaid at the Department of Health andHuman Services Health Care Financing Administration, toldBioWorld. "Thus the potential is there for all sorts of things, includingprice controls. It doesn't hit you in the face the way the initial Clintonbill or the Gephardt bill does but it amounts to a stealth expansion ofthe government's role."The Mitchell bill proposes to fund the new Medicare drug benefit,which the Congressional Budget Office (CBO) estimates will cost $95billion between 1999 and 2004, by reductions in other Medicarespending. (Medicare has historically been among the fastest growinggovernment entitlement programs and politicians have viewed cuttingit as political cyanide.)Although the biotechnology industry is a financial pygmy next tolobbies like the American Medical Association which has spent $3million on the health care debate in the last 18 months, it has madeitself heard on Capitol Hill. The industry has enjoyed several triumphs_ most notably the slaying of the "breakthrough drug committee" andthe prescription drug payment review commission that House MajorityLeader Richard Gephardt (D-Mo.) deleted from the Democraticleadership bill introduced late on Wednesday.However, it remains to be seen whether industry advocates can affectthe course of debate in the Senate. Mitchell's Medicare outpatient drugbenefit is far from perfect in the industry's eyes _ it includes a flat 15percent rebate requirement for drugs purchased under the government-run fee-for-service delivery option. Fee-for-service plans historicallyhave seen costs spiral, since the government has not been a cost-effective buyer of medical services or products."The market, left to its own devices, will cut a great deal for those withmarketing power and completely screw those people who are on theirown," American Association of Retired Persons (AARP) spokesmanJohn Rother told BioWorld. "And basically that's what's beenhappening for people on Medicare. Because Medicare hasn't used itsbargaining power with the drug companies, it's the Medicare patientwho's paying the most per prescription today. That's what we're tryingto change."Rother said he believes that the federal government must be able to cuta deal with manufacturers of drugs as least as attractive as that cut byhealth maintainance organizations and pharmacy benefit managementorganizations. The Mitchell bill's rebate requirement is one way ofattempting to ensure that.AARP, which represents 33 million older Americans, announced onWednesday that it supports both the Mitchell and Gephardt bills. Somehave argued that the Mitchell bill's prescription drug benefit is skimpy.Although the bill leaves the deductible unspecified, the CBO estimatedthat the deductible would be $700 in the first year of the program,1999. Medicare recipients would be subject to a 20 percent co-paymentfor drugs after the initial outlay until spending exceeded $1,275.But how many older people actually have drug costs that high?According to Rother, about 15 million current Medicare recipientsspend more than $500 per year on drugs. "This [the Mitchell bill'sMedicare prescription drug benefit] is not the benefit we had hoped forbut it's a good benefit because it would help the people who have themost serious problem," said Rother.He said an indirect benefit of the high deductible would be "keepingthe pressure on pharmaceutical companies to keep prices reasonable." n
-- Lisa Piercey Washington Editor
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