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Officials Defend Cost of Medicare Drug Benefit

Importation, Negotiation Ideas Rejected

By Ceci Connolly
Washington Post Staff Writer
Thursday, February 17, 2005; Page A07

Under attack from leaders in both parties over skyrocketing prescription drug prices, two top administration officials yesterday rebutted claims that costs could be significantly lowered if President Bush would allow drug importation and permit the government to negotiate with drugmakers on behalf of senior citizens.

"This is serious business, and we need serious numbers guiding our actions," said Mark B. McClellan, administrator of the Centers for Medicare and Medicaid Services. Noting that the Medicare prescription drug benefit is slated to go into effect in 10 months, McClellan suggested it was not the time to reopen the debate.

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"We are moving forward fast, and we need to concentrate on approaches that have the serious ability to get costs down," he said in a hastily arranged news briefing.

In two hearings on Capitol Hill, senators vented their frustration about the growing price tag for a drug benefit that will cost more than $100 billion a year by 2014, according to the Bush administration. Over the next decade, Medicare drug coverage is estimated to cost $1.2 trillion, though McClellan predicts offsetting savings that would bring that down to $724 billion.

Sen. Edward M. Kennedy (D-Mass.) and Rep. Henry A. Waxman (D-Calif.) wrote Bush on Tuesday suggesting that Medicare could save $190 billion over the next decade if the seniors program adopted the price-negotiating model used by the Department of Veterans Affairs. They reached that figure by taking the gross cost of the Medicare drug program ($905 million) and applying a conservative estimate of the VA discount (about 45 percent).

McClellan, armed with a memo from Medicare's chief actuary, said the administration believes that private health plans and pharmacy benefit companies that will administer the new benefit will be more effective at bargaining. And he noted that veterans can only obtain medications that are on a limited, pre-approved list called a formulary.

Yet Medicare providers likely will use similar formularies, and in December, outgoing health and human services secretary Tommy G. Thompson said one of his regrets was not including the power to negotiate prices in the Medicare law.

Told that McClellan dismissed the calculation, Kennedy replied: "It is serious business, and it's time the administration got serious about helping senior citizens get affordable drugs instead of helping drug companies achieve windfall profits."

Earlier in the day, Surgeon General Richard H. Carmona confronted mounting pressure from Republicans and Democrats to allow Americans to purchase lower-priced medications from other countries, such as Canada.

With 355 "points of entry access" into the United States -- from ports to postal facilities -- he said there is a "huge challenge of ensuring the safety of imported drugs."

A bipartisan bill allowing the importation of Food and Drug Administration-approved medicines from other countries recently picked up the support of Senate Finance Committee Chairman Charles E. Grassley (R-Iowa), leading co-sponsor Byron L. Dorgan (D-N.D.) to predict victory if they can get a Senate vote.

"The drug benefit in the Medicare bill has now ballooned to hundreds of billions of dollars more than previously disclosed," Dorgan said in an interview. "With that kind of pressure, everybody understands you've got to put downward pressure on prices."

Minnesota Gov. Tim Pawlenty (R) told senators that in the first year of running a state-approved importation program, Minnesota RxConnect filled more than 9,000 prescriptions at an estimated savings of $300,000 -- and not one safety problem has arisen.

Given that experience, Pawlenty said he believes it is time to legalize the process. Failing that, in the words of Paul McCartney, he pleaded: "Let it be."

© 2005 The Washington Post Company


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