Sen. Dayton Introduces Proposal To Change Medicare Law, Allow Federal Government To Negotiate Drug Prices

Sen. Mark Dayton (D-Minn.) on Monday announced that he will become "one of his party's standard-bearers" to revise the new Medicare law with legislation to allow CMS to negotiate directly with pharmaceutical companies for discounts on prescription drug prices, a practice banned under the law, the AP/Duluth News Tribune reports (Lohn, AP/Duluth News Tribune, 1/25). The bill also includes provisions to reduce Medicare premiums; address coverage gaps in the new prescription drug benefit, which is scheduled to begin in 2006; and ensure that beneficiaries are not forced to enroll in Medicare Advantage plans. According to a Dayton staff member, the legislation would reduce premiums for some beneficiaries through the elimination of an estimated $12 billion in subsidies that the Medicare law provides for HMOs and pharmacy benefit managers to administer prescription drug coverage. In addition, the bill over time would eliminate the coverage gap in the Medicare prescription drug benefit for annual medication costs between $2,200 and $3,600. The legislation would not affect the $250 annual deductible and $35 monthly premiums that Medicare beneficiaries will have to pay for the prescription drug benefit. At a press conference on Monday in St. Paul, Minn., Dayton said, "This is about survival," adding, "People are being ravaged by escalating drug prices that are out of control." Dayton also said that the bill will serve as the "the major reform legislation of the Democratic caucus next year." According to the Minneapolis Star Tribune, Dayton "charged that [President] Bush's prescription drug policies essentially have been written by pharmaceutical companies and other corporate health care interests" (Smith/Diaz, Minneapolis Star Tribune, 1/25).

Prospects
Dayton said that the Medicare reform legislation could pass in the Senate with support from a few Republicans. He said that he does not have a House co-sponsor or cost estimate for the bill. In addition, the pharmaceutical industry likely will oppose the legislation, Dayton said (AP/Duluth News Tribune, 1/25). Jeff Trewhitt, a spokesperson for the Pharmaceutical Research and Manufacturers of America, said, "The best way to achieve cost savings with a Medicare drug benefit is by having private health plans negotiate discounts with the pharmaceutical and biotechnology companies" (Minneapolis Star Tribune, 1/25). According to Trewhitt, a Congressional Budget Office study found that a provision to allow CMS to negotiate directly with pharmaceutical companies for discounts on prescription drug prices would have a "negligible effect" on federal Medicare costs (Duluth News Tribune, 1/25).

Dual Eligibles And The Medicare Drug Benefit
U.S. residents eligible for both Medicare and Medicaid will face a "variety of challenges" as they move to the Medicare program for prescription drug coverage, some health care experts said on Monday at a forum sponsored by the Kaiser Commission on Medicaid and the Uninsured, CQ HealthBeat reports. Some experts at the forum praised "the many positives" about the Medicare prescription drug benefit for low-income beneficiaries, such as the "high level of subsidies, automatic enrollment to prevent gaps in coverage and "higher payments to plans that cover the sickest beneficiaries," CQ HealthBeat reports. Other experts at the forum raised concerns about a number of potential problems -- "unintentional consequences" of the implementation of the new Medicare prescription drug benefit -- that could affect dual-eligibles, according to CQ Health Beat. Gene Gessow, director of the Iowa Medicaid program, said dual-eligibles have asked questions about which medications different plans will be covered under the Medicare prescription drug benefit and how to obtain treatments not on the formularies of the plans. He also raised concerns that confusion about the Medicare prescription drug benefit could lead to "medication hoarding" among dual-eligibles, CQ HealthBeat reports (CQ HealthBeat, 1/24).

Three Kaiser Family Foundation reports on issues facing dual-eligibles are available online.