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Dems Announce Bill Allowing Medicare to Offer Government-Run Drug Plan

By Mary Agnes Carey, CQ HealthBeat Associate Editor

JANUARY 27, 2009 -- On Tuesday Senate and House Democrats introduced legislation that would allow Medicare to offer seniors a government-run prescription drug plan as an alternative to private plans currently offered in the Medicare drug program.

Senate Majority Whip Richard J. Durbin, D-Ill., along with House Democrats Marion Berry of Arkansas and Jan Schakowsky of Illinois, said that allowing the traditional Medicare program to create its own prescription drug plan for beneficiaries would bring more competition to the Medicare drug program (PL 108-173), which Congress created in 2003. The lawmakers said the bill (HR 684) is similar to legislation they introduced in the 110th Congress.

If beneficiaries like the drug coverage they have, "they can keep it," Berry told reporters during a telephone news conference. The bill would require the secretary of Health and Human Services to negotiate the purchase price of drugs covered under the Part D program with drug makers, a step that bill proponents said would help reduce drug prices and make it easier for drugs to be added to the plan's formulary, or list of covered of drugs.

The measure also would strengthen beneficiaries' appeal rights to get coverage for drugs that are medically necessary but may not be covered by the plan. Medicare could create "one or more Medicare-operated drug plans" to compete with the private sector, according to a news release describing the legislation.

"Under our bill, seniors and people with disabilities would finally be able to select a Medicare-operated drug plan that provides a guaranteed benefit without having to worry that their premiums will drastically increase or their access to needed drugs will drastically decrease each year," Schakowsky said.

Having the Medicare program negotiate directly with drug makers could produce deep discounts that private sector prescription drug plans can't match, Berry said.

"If this works as we think it will, most of the private plans would drop out," he said.

The Pharmaceutical Research and Manufacturers of America (PhRMA) is reviewing the bill and said it would work with its sponsors to help Medicare beneficiaries get the drugs they need. "It's important to note however, that the competitive market approach of the Medicare drug benefit is working well for patients and taxpayers," PhRMA Senior Vice President Ken Johnson said in a statement. Beneficiaries saved $1,200 on drugs on average in 2008 and the cost of the program is less than previously Congressional Budget Office estimates, he said.

Durbin said he was not opposed to moving the bill as stand-alone legislation "but I want to be realistic about this," noting that the measure could be part of larger health overhaul legislation.

Groups supporting the bill include the American Public Health Association, the Center for Medicare Advocacy and the Medicare Rights Center.

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