CBO Chief Casts Doubt on Savings from Medicare Prescription Drug Benefit

While the pharmaceutical industry and others have claimed that a prescription drug benefit under Medicare would reduce the program's costs, Congressional Budget Office Director Dan Crippen predicted "no such savings" during a March 27 House Ways and Means health subcommittee hearing, CongressDaily/A.M. reports. Supporters of a Medicare drug benefit have said that allowing beneficiaries to "control chronic conditions" through medications would "cut down" on hospital admissions and emergency room visits for preventable illnesses and complications, but Crippen said that recent studies supporting such an argument are "not very compelling." In addition, he said that "making drugs more affordable could have adverse cost consequences of its own" -- such as an increase in "costly complications from drug interactions" -- concluding, "[A]t the moment we assume no net savings to any other parts of Medicare" by adding a drug benefit. Crippen also "made clear" that Congress faces "numerous tradeoffs" in developing a drug benefit, with CBO recently increasing the estimated cost prescription drugs for Medicare enrollees for the next decade by 32% to $1.5 trillion. "For example, it is not possible to provide a generous drug benefit to all Medicare beneficiaries at a low cost -- either enrollees' premiums or the government's subsidy costs would be high," he said. Also at the hearing, Democrats "made clear" their belief that the $153 billion Republican budget for a drug benefit "is not enough." Rep. Gerald Kleczka (D-Wis.) said, "The bottom line is that the health subcommittee should not be held hostage to a budget that shortchanges a Medicare drug benefit," adding, "I think we would be better off reporting no drug benefit than reporting a $105 billion to $153 billion plan that would undoubtedly fall so dramatically short of what is needed" (Rovner, CongressDaily/A.M., 3/28).

Reimportation Revisited
In other prescription drug cost news, Phil Sokolof, a wealthy Nebraska businessman who has pushed for healthier fast food in the past, has now "tak[en] on" the high cost of prescription drugs by paying for newspaper ads promoting reimportation. Sokolof has launched an ad campaign to urge President Bush to "get behind" a prescription drug reimportation law which "languished" in the previous White House. The law would allow pharmacists and wholesalers to reimport from abroad pharmaceuticals that met federal safety standards. While former President Clinton signed the legislation, but former HHS Secretary Donna Shalala refused to implement the law, saying that she "couldn't guarantee the re-entering medicines would be safe." Sokolof disagreed, saying in an interview with the Associated Press, "There are safeguards. They are not going to bring drugs back in here that aren't properly labeled." Sokolof on March 28 ran a full-page ad in about 25 major newspapers, including USA Today and the Washington Post, which said: "American drug prices are outlandish! ... PRESIDENT BUSH PLEASE KEEP YOUR WORD!" Sokolof "contends" Bush promised in his third presidential debate with Al Gore to back the law. Bush administration officials had no comment Tuesday. The ads cost about $350,000. According to congressional researchers, HHS Secretary Tommy Thompson "can simply reverse the Shalala decision" ( AP/Nando Times, 3/27).