WASHINGTON _ Senate Majority Leader George Mitchell (Maine)presented a 21-page executive summary of his health care bill onTuesday less than one hour after showing it for the first time toDemocratic caucus members. The bill aims to provide 95 percent ofAmericans with health insurance by the year 2000 without requiringemployers to pay their workers' insurance.The Mitchell bill, forged from bills produced by the Senate Financeand Labor and Human Resources Committees, appears at first blush tohave eliminated many of the drug price cost control mechanisms inPresident Clinton's Health Security Act. Although the legislativelanguage has not been finalized, the bill may be far more palatable tothe biotechnology industry than the House leadership bill."We have removed many of the cost control mechanisms in the Clintonbill," Mitchell claimed at a news conference. "We believe this billrepresents a superior approach to the problem. It's designed to increasethe cost sensitivity of the market."Medicare Outpatient Prescription Drug BenefitMitchell's bill establishes an outpatient prescription drug benefit forMedicare beneficiaries that will cost roughly $94 billion from 1999 to2004, according to preliminary estimates. The bill provides threedelivery mechanisms for the benefit: a fee-for-service plan, aprescription benefits management (PBM) option and a healthmaintainance organization (HMO) option, all effective Jan. 1, 1999.The choice of delivery mechanisms could be a boon for the drugindustry, which might be subject to more elaborate controls under astraight fee-for-service plan. The HMO and PBM options representmore flexible, market-based approaches to delivering the prescriptiondrug benefit.Drug manufacturers will sign rebate agreements with the Departmentof Health and Human Services (HHS) in exchange for no formularyunder the fee-for-service option. Drugs used as part of HMOs or PBMs(negotiated, capitated payment schemes) and drugs used for theworking aged will not be subject to rebates.According to a leadership aide who spoke at a technical briefing onTuesday afternoon, the Mitchell bill does not give HHS any otherpowers to negotiate rebates beyond its ability to demand a flat 15percent rebate. The aide said that breakthrough drugs with no marketcompetition could not be subject to a rebate higher than 15 percentunder any circumstances. The rebates are fixed in law, confirmed aDemocratic aide.The relative generosity of the Mitchell Medicare outpatient drugbenefit is still unclear. The executive summary document stated thatMedicare beneficiaries would have an annual deductible for drugs to bedetermined by the secretary of HHS, a 20 percent co-payment and anannual out-of-pocket limit of $1,275 in 1999. The size of thedeductible could be key in allaying senior citizens concerns about drugprices and in turning down the heat on the pharmaceutical industry."Rather than set the deductible in the law, which is very politicallysensitive, as you can imagine, we left that up to the secretary," aDemocratic leadership aide told BioWorld. "There's a fixed amount ofmoney for prescription drugs so the bill allows the secretary to get apot of money, [HHS is] going to have that money and [it] will then beable to calculate what the deductible will be."Mitchell's bill does not link the Medicare outpatient drug benefit to adrug price review commission as other bills have, most notably theHouse Democratic leadership bill introduced late last week. The billdoes establish a National Health Care Cost and Coverage Commissionto monitor and make recommendations with respect to trends in healthinsurance coverage and costs. The commission would consist of sevenmembers to be appointed by the president and confirmed by the Senate.Unlike price review commissions proposed in the House that focus ondrugs, the Mitchell cost commission would study a broad range ofhealth care issues. Among those issues: the demographics andemployment status of the uninsured, the structure of health deliverysystems, the status of insurance market reforms and the success ofmarket mechanisms in expanding coverage and controlling costs.Beginning Jan. 15, 1999, the commission would issue an annual reporton the affordability of coverage for families and employers and on thesuccess of market incentives in achieving cost containment. If the costcommission finds that reform has not increased coverage or controlledcosts, it could make recommendations for improvements. Indetermining cost overruns, the commission would rely onpredetermined growth rates for health care expenditures whichessentially amount to global budgets.It is widely believed that global budgets will put downward pressure onprices for all health care services, including drugs. However, drugindustry advocates have argued that global budgets are preferable tosectoral budgets which could directly cap prescription drugexpenditures.The Mitchell bill contains plans for a Biomedical and Health ServicesResearch Fund, to be financed in part by premium assessments leviedon high-cost health plans that exceed target growth rates. The moneywould be funneled to the National Institutes of Health (NIH) and to theAgency for Health Care Policy and Research (AHCPR). The NIHwould fund basic research while the AHCPR would fund outcomesresearch.The standard benefit package described in Mitchell's bill includesoutpatient prescription drug coverage and coverage for investigationaltreatments (i.e., costs for patients participating in clinical trials ofexperimental drugs).Carl Feldbaum, president of the Biotechnology Industry Organization,said it's too early to call the Mitchell bill a victory for biotech. "It's asummary document that keeps certain cards critical to the biotechindustry face down," he told BioWorld. "You cannot yet discuss thesebills definitively. A technical briefing is not legislative language."Feldbaum conceded that the cost commission described in Mitchell'sexecutive summary was certainly designed to look benign, but said hewould withhold judgment until the final bill was available for review.Mitchell said that final legislation will be introduced on the Senatefloor today and that the amendment process could begin Aug. 9. Whenand if the bill, which will almost certainly be revised during the floordebate, passes, it will be reconciled with the House bill (if that passes)in a conference involving the leadership from both chambers. Once asingle bill has been approved by both the House and Senate, it will besent to President Clinton for action. n
-- Lisa Piercey Washington Editor
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