It's up to reps to contain skyrocketing drug costs
Thursday, June 22, 2006 8:06 AM PDT
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E-mail this articleCongress may want to revisit the Medicare drug program. The new benefit's costs are rising faster than its architects had anticipated. Brand-name drug prices shot up nearly 4 percent in the first three months of the year. It was the largest quarterly increase in six year. The program's higher costs will be shouldered by taxpayers and some seniors participating in the benefit.
Insurers participating in the Medicare program were supposed to protect beneficiaries and taxpayers, alike, from this kind of spike in drug costs by negotiating with drug makers for lower prices. That hasn't happened to any significant extent, according to the AARP and Families USA.
Families USA, a health advocacy group, reported Tuesday that insurers passed on the first quarter increase for 19 of the top 20 drugs that lead in sales. "Part D plans are doing essentially nothing to contain the fast-rising prices by the drug industry," Ron Pollack, executive director of Families USA, told Associated Press writer Kevin Freking.
The obvious remedy for this problem is to give Medicare authority to negotiate for lower drug prices, rather than leave it to participating insurers. It's what Congress should have done when drafting the benefit. Instead, Congress specifically denied Medicare that authority.
This negotiating authority, which has been exercised for years by the Veterans Affairs Department, would bring substantial savings to both the government and Medicare beneficiaries. Insurers just don't have the same clout at the negotiating table.
Families USA reported that the Part D plan was higher than the lowest price obtained by the VA for each of the top selling 20 drugs. The median price difference was 46 percent. One very dramatic example of the price difference cited by Families USA was for the cholesterol drug Zocor. The lowest annual VA price was $127.44; the lowest annual price for Zocor under the Medicare drug program was $1,275.36.
"When Congress prohibited Medicare from bargaining for cheaper drug prices," Pollack told AP reporter Freking, "it created a huge windfall for the drug companies and unaffordable prices for America's seniors."
Indeed. It's time this Congress stopped looking out for drug makers' profit margin and started serving the interests of Medicare beneficiaries and taxpayers.
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