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Democrat's Report Says Medicare Drug Benefit Doesn't Offer Lowest Prices

NOVEMBER 23, 2005 -- The new Medicare prescription drug benefit does not deliver on its promise of reducing drug prices for the program's more than 40 million elderly and disabled beneficiaries, according to an analysis prepared for Rep. Henry A. Waxman, D-Calif.

The report concluded that the average drug prices offered by 10 leading Medicare drug plans are higher than prices of the same drugs available from Canada, through the Department of Veterans Affairs, or from traditional U.S. retail pharmacies.

The prices are more than 80 percent higher than prices negotiated by the government for veterans and more than 60 percent higher than the prices available to consumers in Canada.

Even and Costco can beat the Medicare drug plan prices by 3 percent, according to the report, which was prepared by the House Government Reform Committee's minority staff special investigations division. Waxman is the panel's ranking Democrat.

The report questions whether the drug benefit (PL 108-173) will offer "any tangible benefits to anyone but the drug manufacturers and the insurers themselves." The benefit will also cost seniors and taxpayers more if the plans do not deliver low drug prices, the report concludes.

Centers for Medicare and Medicaid Services spokesman Gary Karr said Waxman's report was "misleading, selective, and most of all it's disappointing." He said the analysis did not explain that there are other drugs available in the Medicare drug plans that may be just as effective and cost less than the drugs listed in Waxman's report.

Mark Merritt, president of the Pharmaceutical Care Management Association, which represents pharmaceutical benefit managers or PBMs, said the House Democrats' study was an "apples-to-oranges comparison that is riddled with inconsistencies."

Among the flaws in the study, Merritt said, was the comparison of federally negotiated prices, such as those negotiated by the Veterans' Administration, to prices negotiated by Medicare prescription drug plans.

The VA model would be "unacceptable" to most Medicare seniors, Merritt said, because it provides coverage for only 34 classes of drugs. Medicare prescription drug plans are required to cover at least 146 categories and classes of medication, and provide access to nearly 55,000 pharmacies nationwide.

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