Debate on Medicare Drug Benefit Plans Continues in Senate; Lawmakers Skeptical If Any Bill Has Enough Support to Pass

The Senate on July 23 will hold "test votes" on the two competing proposals to add a prescription drug benefit to Medicare, the Hartford Courant reports. Senate Majority Leader Tom Daschle (D-S.D.) and Minority Leader Trent Lott (R-Miss.) both said they do not expect either plan to receive the 60 votes needed to proceed under Senate budget rules, but Daschle said the test votes are needed to give "traction" to compromise negotiations taking place "behind the scenes" (MacDonald, Hartford Courant, 7/20). The Democratic-backed proposal, sponsored by Sens. Bob Graham (D-Fla.) and Zell Miller (D-Ga.), would establish a Medicare prescription drug benefit at an estimated cost of as much as $500 billion over eight years. Under the legislation, seniors would pay a $25 monthly premium with no deductible, a $10 copayment for generic drugs and a $40 or $60 copayment for brand-name treatments. The government would cover 100% of 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. The Graham-Miller plan is competing with a proposal from a tripartisan group that includes Sens. John Breaux (D-La.), Charles Grassley (R-Iowa), Orrin Hatch (R-Utah), Olympia Snowe (R-Maine) and James Jeffords (I-Vt.). That group has proposed a $330 billion, 10-year bill under which 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, 7/19).

Possible GOP Amendments
A Senate Republican aide said Republicans are likely to introduce amendments to the bills to "clarify conditions" of the reimportation provision the Senate last week added to the generic drug bill that the Democratic leadership is using as a vehicle to address several prescription drug issues, including a Medicare drug benefit (Serafini/Fulton, CongressDaily, 7/19). The Senate on July 17 approved an amendment that would allow U.S. pharmacies and wholesalers to reimport low-cost prescription drugs from Canada, where they are generally less expensive. The amendment requires the HHS secretary to certify that drug reimportation will be safe and provide consumers with significant savings. In addition, HHS could end the program if there is "significant evidence" that counterfeit drugs are crossing the border (Kaiser Daily Health Policy Report, 7/18). The aide said Republicans may also offer amendments to "strike or modify" the reimportation provision (CongressDaily, 7/19).

Democratic Strategy
Sen. Debbie Stabenow (D-Mich.), who has been a "Democratic leader" on the prescription drug issue, said Democrats would likely not bring forward several tax-related amendments to the bill, including one that would limit the amount of marketing expenses drug makers can claim as a tax deduction. She said that such proposals could "bog down the drug debate" by giving Republicans the opportunity to offer tax amendments unrelated to prescription drugs. CongressDaily reports that Democrats are also considering offering amendments on physician ethics and on the federal contribution to Medicaid.

Breaux Compromise
Breaux has asked the Congressional Budget Office to determine the cost of "phas[ing] in" the financial risk to the health plans that would offer the Medicare drug benefit under his plan. A phase-in would allow the federal government to assume the risk for health plans whose costs exceed cost projections for providing the benefit. After two years, unexpected costs would be shifted gradually to the health plans. Phasing in the financial risks may encourage health plans to participate in the program, Breaux said (CongressDaily, 7/19).

Taking to the Airwaves
A number of lawmakers debated the Medicare prescription drug issue this weekend (Epstein, Tampa Tribune, 7/21). Speaking on CBS' "Face the Nation," Sen. Don Nickles (R-Okla.) said the disagreement between Democrats and Republicans may keep the Senate from passing any plan. He also criticized the Democratic-backed proposal, saying a "government-run drug benefit would cause drug prices to skyrocket." Sen. John Edwards (D-N.C.), who also appeared on the show, said Republicans would give health plans "too much say in what drugs would be covered." He also criticized the tripartisan plan for including a "big gap" in coverage (Hallan, Bloomberg/Detroit Free Press, 7/22). In the Democrats' weekly radio address on Saturday, Sen. Paul Wellstone (D-Minn.) accused the drug industry and its "political allies" of trying to prevent a Medicare drug benefit. "They oppose allowing older Americans to come together to negotiate drug prices. They continue to slip in special congressional loopholes to keep lower-priced generic drugs off the market," he said, adding, "We should use the purchasing power of the more than 40 million Medicare beneficiaries to bargain with the pharmaceutical industry for lower drug prices" (AP/Nando Times, 7/20).
NPR's "All Things Considered" on July 21 reported on the Senate debate over a Medicare prescription drug benefit (Rovner, "All Things Considered," NPR, 7/21). The full segment is available online in RealPlayer Audio. NPR's coverage of the Senate Medicare prescription drug debate is archived online.