Drug Bill Endangers Highly Rated Program

Published January 1, 2009

Ohio Congressman Dennis Kucinich (D) has introduced legislation to allow senior citizens to buy prescription medicines overseas “from approved foreign countries where drugs are significantly cheaper,” while doing away with Medicare Part D’s noninterference clause.

House Resolution 6800, the “Medicare Drugs for Seniors Act,” also would impose limits on the prices the federal government would allow drug manufacturers to charge for their products if the research and development that led to the drugs’ discovery was financed by taxpayer dollars.

Seniors Already Satisfied

“Medicare beneficiaries want their prescription drugs without having to navigate a complicated maze of choices and stealth loopholes,” Kucinich said in a press release announcing the legislation.

Kucinich made his proposal despite seniors’ extremely high satisfaction rate with the Part D benefit and lower-than-expected costs of the program. A Wall Street Journal Online/Harris Interactive survey of U.S. adults age 65 or older showed 87 percent of those enrolled in a Medicare drug benefit plan are satisfied with their coverage.

Low Cost, High Satisfaction

When introducing HR 6800, Kucinich was quick to declare the failure of privatized purchasing.

“The privatized drug plan has been given a chance and, as predicted, it has failed,” Kucinich said. “There is no reason for us to keep throwing money at a bad idea when we know we can save taxpayers billions of dollars and give seniors the medication they need.”

But officials at the government agency overseeing the plan say the opposite is true. According to Kerry Weems, acting administrator at the Centers for Medicare and Medicaid Services (CMS), “Overall, costs for beneficiaries and taxpayers are considerably lower than originally projected, enrollment continues to rise, and customer satisfaction remains very high.”

The projected cost of Medicare Part D over the next decade is now $117 billion lower than experts estimated just last summer, due to marketplace competition.

An additional benefit of the plan has been a 17 percent decrease in out-of-pocket expenses, or $9 a month, for seniors who enrolled in the new Medicare Part D benefit in 2006, the first full year it was available, according to a study published in the Annals of Internal Medicine. The savings amounted to an extra 14 days of medicine per person, or a 19 percent increase in prescription usage.

Private Enterprise Trumps Subsidies

Regarding the use of taxpayer dollars for drug development, researchers from the Manhattan Institute and Tufts University examined the case histories of 35 widely prescribed drugs and determined almost none of them would have been developed without private-sector research. In 28 cases they found private-sector research led to improvements in a drug’s clinical performance or a better way to manufacture the drug.

The pharmaceutical industry outspends the government on drug development. In 2007 the industry spent $58.8 billion, while the National Institutes of Health allocated $28.6 billion in grants, only part of which went to developing new drugs. Both the private and the public sector are important in drug development and collegiality, not conflict, is the way things get done.

Importation Still a Non-Starter

HR 6800’s promotion of drug importation likewise ignores real-world evidence and market conditions. A study by the nonpartisan Congressional Budget Office found a policy favoring drug importation would reduce the nation’s spending on prescription medicines by only 0.1 percent—without taking into account the millions of dollars the Food and Drug Administration would have to spend in setting up a monitoring system.

In addition, though much of the proposed importation policy is based on the expectation pharmaceuticals will be imported from Canada and will be “the same drugs Canadians get,” the reality is quite the contrary. Canadian Internet pharmacies—by their own admission—are sourcing their drugs from the European Union. And while they may say their drugs come from the United Kingdom, 20 percent of all the medicines sold in the UK are imported from other nations in the European Union such as Greece, Lithuania, Portugal, and Spain.

Legalizing importation also could facilitate terrorism. According to a recent report from the federal Joint Terrorism Task Force, a global terrorist ring with ties to Hezbollah is currently importing counterfeit drugs into America by way of Canada. They are doing so for profit today, according to the report, thus financing terrorism, and they could just as easily do so for more immediately deadly purposes in the future.

States’ Programs Unpopular

Individual states’ experiences with importation have been dismal. During 19 months of operation, Illinois’ high-profile “I-Save-Rx” program was used by a total of 3,689 Illinois residents—approximately .02 percent of the population.

Minnesota’s RxConnect program has been similarly unsuccessful. According to its latest statistics, RxConnect, designed to serve a state of 5,167,101 people, fills about 138 prescriptions a month.

With HR 6800, Kucinich appears to have ignored each of these facts, every one of which makes his proposal to further remove the private sector from America’s health care market less likely to succeed and more likely to exacerbate the “problem” he claims to be trying to solve.

Peter Pitts ([email protected]) is president of the Center for Medicine in the Public Interest.

For more information …
HR 6800, the Medicare Drugs for Seniors Act: http://thomas.loc.gov/cgi-bin/bdquery/z?d110:h.r.06800:

“The Effect of the Medicare Part D Prescription Benefit on Drug Utilization and Expenditures,” Annals of Internal Medicine: http://www.annals.org/cgi/content/full/0000605-200802050-00200v1