Senators Agree on Scaled-Back Medicare Drug Benefit; Plan To Be Unveiled This Week

Senate Democrats have "drastically scaled back" their criteria for a Medicare prescription drug benefit in an effort to win enough Republican support to pass a plan early this week, the Washington Post reports. Currently, Democrats are backing two proposals, which diverge in different ways from Democrats' long-held beliefs that all Medicare beneficiaries receive the drug benefit and that a drug benefit be administered by the federal government through Medicare. The first plan, proposed by Sens. Bob Graham (D-Fla.), Jeff Bingaman (D-N.M.) and Blanche Lincoln (D-Ark.), would limit benefits to low-income seniors or those with "catastrophic" costs, the Post reports (Dewar/Goldstein, Washington Post, 7/28). Under the proposal, which would begin in 2005 and cost an estimated $400 billion through 2012, Medicare would manage a plan that covers all drug costs for seniors earning up to 150% of the federal poverty level. Beneficiaries with incomes higher than 150% of poverty would not qualify for full coverage but would instead receive a 35% discount on drugs, which includes a 5% government subsidy (Barfield Berry, Newsday, 7/27). The plan does not include any monthly premiums or deductibles, but there is a $25 annual enrollment fee, which would be waived for low-income beneficiaries (Carter, AP/Nando Times, 7/26). Once annual out-of-pocket spending reaches $4,000, full catastrophic coverage would be provided to all beneficiaries. While the extent of Republican support for the plan is unclear, Sen. Gordon Smith (R-Ore.) has "signed on," the Post reports (Washington Post, 7/28). "This new bipartisan plan will help all seniors buy prescription drugs but it will give the greatest help to the most vulnerable older Americans, those with lower incomes and with the most serious health problems," Graham said (AP/Nando Times, 7/26). Graham and Smith said they believe the plan can win the 60 votes required for passage. Senate Majority Leader Tom Daschle (D-S.D.) set a Tuesday deadline to vote on the plan (Newsday, 7/27).

Including Private Insurers
Meanwhile, Senate Finance Committee Chair Max Baucus (D-Mont.), Sen. Edward Kennedy (D-Mass.) and Sen. John Breaux (D-La.) are "nearing agreement" on a second plan that "breaks with another Democratic article of faith" by relying on both Medicare and private insurers to provide a benefit, the Post reports (Washington Post, 7/28). Under the possible compromise, Medicare would start providing drug coverage in 2005 and private insurers and health plans would begin to contract with the government to offer the benefit in future years. They would be required to provide benefit packages similar to those proposed in a plan sponsored by Graham and Sen. Zell Miller (D-Ga.) that the Senate rejected last week. Insurers would slowly assume the financial risk of providing coverage, but the government would limit their potential losses and profits. Medicare would deliver the benefit in areas where private insurers do not (Kaiser Daily Health Policy Report, 7/26). Breaux said that the plan would cost between $400 billion to $450 billion and that benefit levels would be adjusted to keep the cost within that amount. Daschle said he would bring to the floor whichever plan first garners the 60 votes needed to pass (Washington Post, 7/28).

Failure Spurs Action
NPR's "All Things Considered" on July 28 reported that the Senate's rejection last week of several proposals to add a prescription drug benefit to Medicare has actually started real debate on the issue and "only now have negotiations gotten very serious" about developing a plan (Rovner, "All Things Considered," NPR, 7/28).
The full segment is available online in RealPlayer.

Win for Generic Drugs?
In other prescription drug news, the Wall Street Journal reports that the generic drug industry is "within reach of a big victory on Capitol Hill" as the Senate is nearing a vote on a bill (S 812) that would allow generic drug manufacturers to bring cheaper treatments to the market faster. The legislation would close a loophole in a provision of 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. Although the bill appears to have the support of more than 60 senators, the legislation's fate in the House is less certain, and the White House opposes the measure, saying it could increase the number of patent infringement lawsuits, the Journal reports (McGinley/Adams, Wall Street Journal, 7/29).