House GOP Medicare Drug Bill Would Focus on Generics, Ask Drug Makers To Reduce Advertising

House Republicans said on March 5 that they may include provisions in their draft of legislation to add a prescription drug benefit to Medicare that would "encourage the use of low-cost generic drugs" over brand-name treatments, the New York Times reports. The Times reports that the announcement marks the first time in the debate over a Medicare prescription drug benefit that a "consensus has developed among legislative leaders in both parties favoring financial incentives" for the use of generic drugs to reduce costs. Many governors, labor unions and large employers have urged Congress to "speed access" to generic drugs, which they have said could "save billions of dollars" in prescription drug costs. Some lawmakers, such as Sens. Charles Schumer (D-N.Y.) and John McCain (R-Ariz.), have said that they favor legislation to promote the use of generic drugs. Schumer said that increased use of generic drugs would help control the cost of a prescription drug benefit under Medicare. "How can you get more bang for the buck? Generics are the answer, the best cure we have right now," he said.

GOP Mulls Options
Under one option House Republicans may consider for a prescription drug benefit, beneficiaries would be charged a higher copayment for brand-name treatments than for generic versions of the drugs, a system currently used by many private health plans. Under another option, if Medicare beneficiaries are prescribed a generic drug but would prefer the brand-name version, they would be responsible for the cost difference between the brand-name and generic versions. Rep. Bill Thomas (R-Calif.), chair of the House Ways and Means Committee, which will draft the legislation, said, "If a physician believes that the generic drug meets the needs of a particular patient, but the patient still wants the brand-name product they saw advertised on television, then the patient should be able to have the drug they want, but they shouldn't have it paid for by taxpayers." He added, "If the patient wants it enough, they can pay the difference."

Price Could Be Linked to Ads
A third option, which the Times describes as "novel," would charge beneficiaries a higher price for brand-name drugs that are advertised. Under this proposal, a Medicare prescription drug benefit would include three levels of copayments. Medicare beneficiaries would have to pay the largest copayment for advertised brand-name drugs, a smaller copayment for unadvertised brand-name drugs and a "very low charge" for generic drugs, the Times reports. House members of both parties also said they hope to find "ways to slow the explosive growth in retail advertising" of prescription drugs because direct-to-consumer advertising in the past few years might be responsible for the recent "sharp rises" in consumer spending on prescription drugs.

Industry Criticism
The Times reports that the proposal to charge Medicare beneficiaries a higher copayment for advertised prescription drugs has drawn criticism from pharmaceutical companies and the advertising industry. A "deeply concerned" Richard O'Brien, executive vice president of the American Association of Advertising Agencies, said, "Advertisers should have the right to talk about their products to the public, as part of their First Amendment rights. With increasing frequency in recent years, the Supreme Court has protected the right of commercial speech." Thomas said that drug companies may use advertisements to improve "consumer education" about prescription drugs, but he added that they also use the ads to increase sales and market share. "You cannot ignore the growing amount that's being spent on pharmaceutical advertising," Thomas said, adding, "The decision to advertise or not advertise would be left completely up to the company. But the idea that you are going to drive up market share by advertising on a product that isn't medically necessary ought not to be in anyone's mind." After the FDA eased restrictions on direct-to-consumer ads on prescription drugs in 1997, the amount that pharmaceutical companies spent on the ads more than tripled to $2.5 billion in 2000, according to a study conducted by the National Institute for Health Care Management, a nonpartisan, not-for-profit group. Consumer spending on prescription drugs, which totaled $132 billion in 2000, increased more than 17% per year from 1996 to 2000, the study found (Pear, New York Times, 3/6).

PhRMA Ad Campaign
Meanwhile, the Pharmaceutical Research and Manufacturers of America announced plans to launch on March 6 a "major" television and print advertising campaign in the Washington, D.C., area to "press Congress to move" on a bill to add a prescription drug benefit to Medicare. The "Now's the Time" campaign, the first in a series of ad campaigns that drug makers plan to launch at the national and local levels, urges Congress to approve a Medicare prescription drug benefit this year that "gives seniors a choice of plans and access to the best drugs." Christopher Molineaux, PhRMA's vice president for public affairs, said, "Passing a Medicare prescription drug benefit is an urgent national priority and remains the top priority for PhRMA." PhRMA did not report the cost of the ad campaign (CongressDaily/AM, 3/6).