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Lawmakers Introduce Bill to Allow Medicare-Run Drug Benefit

By Mary Agnes Carey, CQ HealthBeat Associate Editor

October 24, 2007 -- House and Senate Democrats have introduced legislation that would allow Medicare beneficiaries to receive prescription drug coverage administered by the Medicare program rather than by private insurers.

The bill (HR 3932, S 2219) would permit the Medicare program to negotiate drug prices with pharmaceutical manufacturers and provide consumers with information about the safety and effectiveness of drugs.

"Under current law, Medicare beneficiaries are stuck with confusing, costly plans designed by insurance and drug companies. What seniors deserve is an affordable, straightforward drug benefit," one of the bill's cosponsors, Senate Majority Whip Richard J. Durbin, D-Ill., said in a statement. "This legislation will give them the choice of a drug plan operated directly by Medicare—just like all other Medicare benefits—and require the administration to negotiate on behalf of seniors to bring down the exorbitant costs of needed medications." Durbin, along with House sponsors Rep. Marion Berry, D-Ark., and Rep. Jan. Schakowsky, D-Ill., introduced similar legislation last year.

The bill's introduction Tuesday coincided with the release of a report from the Medicare Rights Center and Consumers Union that concludes a Medicare-administered prescription drug plan would give seniors a plan that is less expensive and easier to understand than those offered by the private sector.

"We know that the private insurance companies aren't getting the best deals for consumers on prescription drugs," Consumers Union senior policy analyst Bill Vaughan said in a statement.

Medicare Rights Center President Robert M. Hayes said a Medicare-administered drug benefit "would benefit consumer's health and pocketbooks and bring down the program's cost for taxpayers." He added that many beneficiaries are unable to get the drugs they need due to the "confusing and exploitative marketplace that dominates the for-profit drug offerings from private insurance companies."

Centers for Medicare and Medicaid Services Spokesman Jeff Nelligan said the Medicare drug program has been a "solid success" because "fierce competition and wise consumer choices have resulted in reduced costs and enhanced savings." He said that beneficiaries are saving an average of $1,200 annually on their drug costs and the program is coming in 30 percent—or nearly $190 billion—under initial estimates.

In their report, Consumers Union and the Medicare Rights Center said the current Medicare drug program is unnecessarily expensive, has coverage gaps, and leaves seniors vulnerable to marketing fraud because the number of plans offering such divergent benefit packages. The groups recommend a national evidence-based formulary for a Medicare-administered drug plan that would help guide doctors and patients on the best medicines to use and establish "a fair and efficient drug appeals system," which they said does not currently exist in the Medicare drug program.

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