Media Advisory: Leave Rx Benefit Alone, Experts Recommend

Published January 11, 2007

(Chicago, Illinois – January 11, 2006) Democrats in Congress have pledged to rework the Medicare Prescription Drug benefit within the first 100 hours of the new session. They would do so by enabling the government to directly negotiate drug prices. But many experts feel tampering with the successful program would limit seniors access to drugs and undermine an efficient model for delivery of public services.

The following statements were acquired by The Heartland Institute from noted policy experts across the country. You are free to reprint them in full or contact the respective experts for further comment. For contact information call Mike Van Winkle 312/377-400 or email [email protected].

Grace-Marie Turner, Galen Institute

“The new Medicare drug benefit is offering seniors savings of about $1,200 a year on their drug costs, and the price of premiums has dropped by 40 percent. When the drug benefit was enacted, Congress expected seniors to pay $37 a month for their drug coverage, but fierce competition among the private drug plans has driven the cost of the basic benefit down to $22 a month. When was the last time a government program actually came in under budget? Private competition is working to get costs down. Congress should not interfere with a program that is working so well, saving both seniors and taxpayers money.”

Devon Herrick, National Center for Policy Analysis

“It is not clear that the federal government could negotiate lower drug prices than the drug plans already provide. The only real negotiating leverage a drug plan has to drive down prices is its ability to refuse to include a given drug in its formulary. This is how the VA Health system achieves low prices–by including in its formulary only about a quarter of the drugs available to Medicare plans. This would reduce seniors’ access to many modern medications.”

Linda Gorman, Independence Institute

“When the federal government negotiated directly with drug manufacturers it set prices so low that no tetanus vaccine manufacturers would sell to the Vaccines for Children program. For years, kids in that program did not receive recommended immunizations. Since the Veterans Administration went to its low-price formulary, patients are forced to use older, less-effective drugs. Their health is suffering as a result. When government negotiates directly, patients lose.”

John R. Graham, Pacific Research Institute

“The only way the government could directly reduce prescription prices would be to severely restrict the medicines available to seniors. This would attract the healthiest seniors out of the current Part D and leave only the sickest in the private plans, leading to a death spiral that would drive up costs and destroy the risk pools. Rather than terminate the choices seniors currently have in Part D, Congress should look at ways to encourage more of them to enroll in Medicare Advantage plans, where they would have greater choice not only for drugs, but for hospitals and physicians too.”

Ryan Ellis, Americans for Tax Reform

“It’s interesting that the majority is so gung-ho to pass this. CBO came out with a cost estimate Wednesday (January 10) that savings would be ‘negligible.’ Polls indicate less than a third of seniors support this plan if there is any chance that their menu of prescriptions might be limited (and they most certainly will–drug companies will walk). The prescription drug benefit is coming in far below cost estimates. Seniors are very happy with the program, according to all polling. So why fix what isn’t broken?”