Obstacles to Medicare Drug Benefit Remain, as Senate Continues Work on Its Measure, CQ’s Carey Says

As Congress returns on July 8 from its weeklong July 4 recess, Senate members will continue to work on their version of a Medicare prescription drug benefit, Congressional Quarterly reporter Mary Agnes Carey says in this week's "Congressional Quarterly Audio Report." The Senate Finance Committee is working to meet a July 15 deadline set by Senate Majority Leader Tom Daschle (D-S.D.). If the committee does not produce a bill by then, Daschle has said he will try to resolve the issue on the floor, Carey says. The committee is considering competing bills by Sens. Bob Graham (D-Fla.) and Charles Grassley (R-Iowa), but neither bill seems to have enough votes -- 60 -- to prevent a filibuster and overcome a budget point of order, defined as an objection that the measure exceeds the $300 billion allocated for a drug benefit in the fiscal year 2002 budget (Carey, "Congressional Quarterly Audio Report," 7/8). Under the Graham bill, seniors would pay a $25 monthly premium with no deductible, a $10 copayment for generic drugs and a $40 copay for brand-name drugs, and the government would cover all drug costs above $4,000. The plan also calls for reduced or no premiums or copays for low-income beneficiaries (Kaiser Daily Health Policy Report, 6/13). The Grassley bill, also sponsored by Sens. John Breaux (D-La.), Olympia Snowe (R-Maine), James Jeffords (I-Vt.), Orrin Hatch (R-Utah), would give seniors three options, which would contain the same Medicare drug benefit. Under the first option, seniors could remain in Medicare as it currently stands and receive the prescription drug benefit. The second option combines Medicare Part A and Part B to create a single deductible for hospital and physician services. Copayments and deductibles would be more costly, but the plan would offer more benefits, including enhanced preventive services and hospital coverage. The third option addresses Medicare+Choice, which would offer defined benefits packages, including drug coverage. In areas where Medicare HMOs have left the market, the government would contract with pharmacy benefit managers to offer drug coverage (Kaiser Daily Health Policy Report, 6/25). Both measures exceed $300 billion, Carey says, but she adds that the likelihood of a senator objecting to either measure on a budget point of order is unlikely because "both parties do not want to see the issue resolved that way."

Prescription Drug Costs
Carey also assesses the feasibility of several measures by Senate Democrats to address rising prescription drug costs. Democrats have proposed allowing U.S.-made medications to be reimported from Canada, limiting the amount drug companies can deduct from their taxes for marketing costs and tightening the 1984 Hatch-Waxman law, which was written to move generic medications to market more quickly. Carey states that the reimportation measure has the best chance of passage, particularly because Democrats have scaled back the proposal from an earlier version that would have allowed reimportation from all nations. However, the Bush administration is unlikely to sign the measure into law because it believes it cannot guarantee the safety of reimported medications ("Congressional Quarterly Weekly Report," 7/8).

Carey's report is available online.