Debate on Prescription Drugs in Senate To Focus on Drug Costs, CQ’s Goldreich Says

In an effort to address prescription drug costs for all consumers, not just seniors, the Senate this week will debate a bill (S 812) that would tighten loopholes in the 1984 Hatch-Waxman that have allowed brand-name drug makers to delay generic competition, Congressional Quarterly reporter Samuel Goldreich says in this week's "Congressional Quarterly Audio Report" (Goldreich, "Congressional Quarterly Audio Report," 7/15). The bill, called the Greater Access to Affordable Pharmaceuticals Act, would amend a provision in the 1984 Hatch-Waxman law that allows brand-name drug companies to receive an automatic 30-month patent extension from the FDA when they file a lawsuit against generic drug makers for alleged patent infringement. It also would prevent brand-name companies from paying generic manufacturers to keep their products off the market and would allow generic companies to legally challenge "frivolous patents," including "superficial changes" in a treatment's color or physical design intended only to "stifle competition" (Kaiser Daily Health Policy Report, 7/15). Democrats will begin debate on this bill instead of Medicare drug benefit legislation by Sen. Bob Graham (D-Fla.) because they believe that adding a drug benefit to Medicare without addressing the "broader question of how drugs are made and marketed" and reducing medication prices would "risk bankrupting" Medicare, Goldreich says (Congressional Quarterly Audio Report, 7/15). Under Graham's measure, which would cost as much as $500 billion over eight years, seniors would pay a $25 monthly premium and no deductible, a $10 copayment for generic drugs and a $40 or $60 copayment for brand-name treatments. The government would cover 100% of seniors' annual out-of-pocket prescription drug costs that exceed $4,000. Low-income seniors would pay reduced premiums, and the bill would exempt Medicare beneficiaries with annual incomes less than 135% of the federal poverty level from premiums and copayments (Kaiser Daily Health Policy Report, 7/11).

Maneuvering
Democrats might add Graham's drug benefit proposal or an amendment that would allow reimportation of U.S.-made drugs from Canada to the generic drug legislation, Goldreich says. He adds that Republicans maintain the reason for such a maneuver is that Graham's bill lacks enough support to pass out of the Senate Finance Committee, an assertion Goldreich says is correct. Republicans themselves are divided between a tripartisan measure by Sens. Charles Grassley (R-Iowa), John Breaux (D-La.) and Jim Jeffords (I-Vt.) and a measure to be offered by Chuck Hagel (R-Neb.) ("Congressional Quarterly Audio Report," 7/15). The $330 billion, 10-year tripartisan measure would allow seniors to purchase prescription drug coverage directly from private insurers. Medicare beneficiaries would pay a $35 monthly premium, and the government would cover 50% of seniors' annual out-of-pocket prescription drug costs up to $2,000 or $2,500, no costs between $2,000 or $2,500 and $3,700, 90% of costs that exceed $3,700 and 100% of costs that exceed $6,000 (Kaiser Daily Health Policy Report, 7/11). Goldreich notes that the measure to be offered by Hagel would give seniors discounts of up to 39% on their medications through a discount card plan managed by private companies ("Congressional Quarterly Audio Report," 7/15). Seniors would pay a one- time annual fee of $25 to participate, which would be waived for seniors earning less than 200% of the poverty level, or $17,720 for an individual and $23,880 for a couple. The program would cap participants' out-of-pocket expenses on a sliding scale. For seniors earning less than 200% of the poverty level, the out-of-pocket expenses cap would be $1,500 per year. The cap would be $3,500 per year for seniors earning between $17,721 and $35,440, or between 200% and 400% of the poverty level. The cap for seniors with incomes between $35,441 and $53,160, or 400% and 600% of the poverty level, would be $5,500, and for those earning more than $53,160, 600% of the poverty level, the cap would be no more than 20% of a participant's income. The program has an estimated cost of $150 billion over 10 years (Hagel release, 7/15).

Goldreich's report is available online.