Healthy Skepticism Library item: 1658

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Publication type: news

Zwillicht T.
Congress to Seek $300 Billion for Medicare Benefit
Reuters Health 2002 Jan 28

Full text:

Congress will seek to set aside approximately $300 billion over the next 10 years to fund a Medicare prescription drug benefit, congressional aides said Friday.

Aides to House Speaker Dennis J. Hastert (R-IL) said that he would seek to attain the $300 billion figure, an amount roughly equal to the money approved for the benefit as part of last year’s budget resolution. Early negotiations last year failed to produce an agreement on prescription drugs or on overall Medicare reform.

The $300 billion is likely to exceed President Bush’s budget request for prescription drugs by approximately $100 billion, said Hastert spokesman John Feehery.

The benefit remains ``by far our top priority’‘ in the coming legislative year, Pharmaceutical Research and Manufacturers of America (PhRMA) president Alan F. Holmer told reporters Friday.

Holmer said that he was ``optimistic’‘ that lawmakers—at least in the Republican-controlled House of Representatives—would succeed in formulating a drug benefit for Medicare’s 39 million beneficiaries in spite of the nation’s expensive war effort and return to deficit spending brought about by tax cuts and an economic slowdown.

``We believe the prospects are quite high for passage in 2002,’‘ he said.

Holmer also said that his group would concentrate on negotiations aimed at reauthorizing the federal Prescription Drug User Fee Act (PDUFA), set to expire in late September of this year. The law governs the fees drug companies pay to the Food and Drug Administration to fund agency review of new drug applications.

Holmer noted a slowdown in average drug approval times over the last two years. Average times that were near a 10-year low of 12.6 months in 1999 went up to 17.6 months in 2000 and 16.4 months in 2001, PhRMA figures show.

Negotiations between policymakers, industry, and FDA representatives have slowed recently, as several lawmakers have sought to revise PDUFA to allow FDA to spend user fees on post-marketing surveillance and enforcement as well as on new drug applications.

PhRMA officials said that they oppose such a move on the grounds that it would create a conflict of interest among FDA reviewers who would use industry money for enforcement efforts against drugmakers.

Holmer also vowed that PhRMA would continue to make its case to the public that rising drug costs are not to blame for 7% annual rises in overall US healthcare spending and that high drug prices are needed to drive innovation and research and development.

But drugmakers are facing mounting pressure from large healthcare purchasers who are increasingly irate over nearly 20% increases in prescription drug costs they saw last year.

Car-maker General Motors last year spent $1.2 billion of its $4.5 billion healthcare budget on prescription drugs, a liability that company healthcare director Bruce Bradley recently called ``a killer.’‘

Bradley expressed his anger at a recent health policy conference in Washington that many of his company’s 1.2 million workers and retirees are taking unnecessary drugs. A GM internal audit showed that 92% of beneficiaries taking the popular heartburn drug Prilosec had not had a previous doctor visit for the ailment.

``We spend $52 million (per year) on Prilosec. There’s a problem here,’‘ he said.

Meanwhile, Neil Trautwein a benefits expert at the National Association of Manufacturers, said that many large companies have begun ``chasing after the pharmaceutical industry with wooden stakes’‘ because costs are so high. He likened the rift to a ``Hatfield and McCoy-type feud’‘ that is pitting closely allied industries against one another.

Manufacturers and drugmakers both oppose price controls or changes to patent laws that could end up cutting drug prices. Trautwein said that companies would continue to clamp down on inappropriate prescribing in their health plans, but that policymakers should find ways to cut prescription prices.

``We don’t want to stop the advancement of pharmaceutical therapies, but I think we need to figure out what is the appropriate balance between corporate and individual responsibility for these costs,’‘ he said.

Rick Smith, PhRMA’s vice president for policy called the notion that drug prices are driving the rise in healthcare costs ``popular mythology.’‘ Just 9% of total healthcare spending goes to pay for prescription drugs, he said.

Ron Pollack, who heads the consumer healthcare group Families USA, predicted that large corporations and health plans would seek to isolate drugmakers in the coming debate over healthcare costs.

``Anyone who is a payer for healthcare is extremely concerned about drug prices and healthcare costs,’‘ he said.

Pollack said that his group would press ahead with plans to support lawsuits brought by individuals and by states seeking to recoup money from drugmakers for alleged price-gouging and abuse of US patent laws. The group is currently involved in two such cases, with more to follow, he said.

``I think we are going to see some hefty money judgments in the not-too-distant future,’‘ Pollack said.