[Senate Hearing 107-789]
[From the U.S. Government Publishing Office]
S. Hrg. 107-789
EXPANDING AND IMPROVING MEDICARE: PRESCRIPTION DRUGS: AN OREGON
PERSPECTIVE
=======================================================================
FIELD HEARING
before the
SPECIAL COMMITTEE ON AGING
UNITED STATES SENATE
ONE HUNDRED SEVENTH CONGRESS
SECOND SESSION
__________
BEAVERTON, OR
__________
AUGUST 15, 2002
__________
Serial No. 107-33
Printed for the use of the Special Committee on Aging
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SPECIAL COMMITTEE ON AGING
JOHN B. BREAUX, Louisiana, Chairman
HARRY REID, Nevada LARRY CRAIG, Idaho, Ranking Member
HERB KOHL, Wisconsin CONRAD BURNS, Montana
JAMES M. JEFFORDS, Vermont RICHARD SHELBY, Alabama
RUSSELL D. FEINGOLD, Wisconsin RICK SANTORUM, Pennsylvania
RON WYDEN, Oregon SUSAN COLLINS, Maine
BLANCHE L. LINCOLN, Arkansas MIKE ENZI, Wyoming
EVAN BAYH, Indiana TIM HUTCHINSON, Arkansas
THOMAS R. CARPER, Delaware JOHN ENSIGN, Nevada
DEBBIE STABENOW, Michigan CHUCK HAGEL, Nebraska
JEAN CARNAHAN, Missouri GORDON SMITH, Oregon
Michelle Easton, Staff Director
Lupe Wissel, Ranking Member Staff Director
(ii)
C O N T E N T S
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Page
Opening Statement of Senator Gordon Smith........................ 1
Panel of Witnesses
Bobby Jindal, Assistant Secretary for Planning and Evaluation,
U.S. Department of Health and Human Services................... 4
Roy Dancer, Retired Educator and Senior Citizen.................. 21
Lydia Lissman, Assistant Director, Oregon Department of Human
Services, Seniors and People with Disabilities................. 26
Michael Kositch, M.D., Medical Director for Primary Care
Services, Kaiser Permanente Northwest Region................... 35
(iii)
EXPANDING AND IMPROVING MEDICARE: PRESCRIPTION DRUGS: AN OREGON
PERSPECTIVE
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THURSDAY, AUGUST 15, 2002
U.S. Senate,
Special Committee on Aging,
Beaverton, OR
The committee met, pursuant to notice, at 10:34 a.m. in the
Beaverton City Council Chambers, 4755 S.W. Griffith, Beaverton,
OR, the Hon. Gordon Smith presiding.
OPENING STATEMENT OF SENATOR GORDON SMITH
Senator Smith. Good morning, ladies and gentlemen. I would
like to welcome you all to this special field hearing of the
Senate Committee on Aging. It is the purpose of this hearing to
explore the Oregon perspective on prescription drugs for
seniors, and we are very thankful that each of you has come and
have an interest in this.
We are going to hear from two panels today, and they are
going to share with us their expertise, and their testimony
will become part of the congressional record, as we use this
hearing to help try and move along the national debate on
prescription drugs in a more productive and informative way.
If time allows, the panelists will also address questions
from the audience, and if you would like to pose a question to
them or to me, please write it down on one of the cards the
staff will provide, and we'll try to get them answered, time
permitting.
Please also make sure that your name and address are
clearly printed on the cards, because if we run out of time, we
will make sure your questions are answered by mail and also
make them part of the congressional record. When you fill out
your card, please hold it up so that our staff can collect it.
Before we move forward to the first panel of witnesses, I
would also like to draw your attention to some of the services
that are available to you today at this hearing. Case workers
from my staff and also from the staff of my colleague, Senator
Wyden, who is not able to be with us this morning, are here to
help resolve problems that you may have with Medicare, Social
Security, or other government entities.
In addition, experts from the Centers for Medicare and
Medicaid, the agency which administers Medicare, are also on
hand to help answer questions and resolve problems.
Representatives from the Senior Health Insurance Benefits
Assistance Program, or SHIBA, are also here.
On behalf of the committee, I am also pleased to welcome
members of the Governor's Commission on Senior Services. We
appreciate that you are here.
On behalf of the committee, I would also like to thank all
of the other agencies that have sent representatives to today's
hearing for the seniors who have turned out for this event
today.
They include the Multnomah County Aging and Disability
Services, Washington County Aging and Veterans Services,
Clackamas County Aging and Disability Services, Oregon Alliance
of Senior and Health Services, Oregon Gerontological
Association, Elders in Action, RSVP of Washington County, Elsie
Stuhr Community Center in Beaverton, the King City Senior
Center, Irvington Covenant Center, Oregon Health Sciences
University, Social Security Administration, and Medicare
Northwest. I think that must cover pretty much everyone in the
room.
We're very pleased that you're here, and we want this to be
informative to you and helpful to this national debate.
I have a statement that I will include in the record and
share with you in part.
I will tell you that prescription drugs for seniors is
truly an issue whose time has come. Medical and technological
breakthroughs in recent years have made it possible to extend
and improve life while controlling illness in ways never
thought possible before, even 50 years ago. People are living
longer and living better with the help of new treatments and
therapies.
But these improvements have come at a price. While Medicare
has done much to reduce poverty for Americans over 65, it has
not grown and adapted to keep pace with the health expenditures
for the 34 million seniors and 5 million disabled younger
adults who rely upon the program.
On average, the Americans over age 65 spent an estimated 22
percent of their income for health services and premiums in the
year 2000. However, seniors in poor health and without
supplemental coverage spent even more, about 44 percent of
their incomes on, health care.
In 1965, when Medicare was created, the average senior
spent $65 per year on prescription drugs. Wouldn't that be
nice? Today, the average senior spends $2,149 each year on
prescription drugs, 35 times more.
Well, drug prices are currently the fastest growing segment
of national health care spending, and yet more than a quarter
of all seniors, many seniors have no source of coverage for
their prescriptions. This is a particularly important issue,
because Americans over age 65 consume three times more
prescription drugs than people under the age of 65. Looking
around the room, I probably don't need to tell you this, but
virtually all Medicare beneficiaries use prescription drugs on
a very regular basis.
One of the purposes of this hearing is to understand
prescription drug use among Oregon seniors. I would like to
hear from you how many of you use one or more prescription
drugs. Can you raise your hand if you are currently taking a
prescription drug pretty much all around?
There may be a few that don't have to, and I am glad for
you.
How many of you are taking three or more drugs at this
time?
A pretty good number. I am not surprised.
Surveys have shown that seniors with some drug coverage
will fill, on average, 22 prescriptions a year, while those
without the coverage will fill less than 15.
How many of you spent more than $100 last month on
prescription drugs, a show of hands?
There you go.
A new survey just released by the Kaiser Family Foundation
and the Commonwealth Fund found that nearly one in four seniors
skip doses in medication or do not fill a prescription due to
cost. Among lower income seniors, the numbers are much higher.
The lack of drug coverage is more than simply a financial
burden; it is a serious health risk for seniors.
Going without prescribed medications can lead to serious
adverse consequences for the health of seniors. Medications can
control chronic conditions and avert acute health conditions if
taken as prescribed, and it can keep people out of the
hospitals, which is much, much more expensive. If taken
incorrectly, seniors' health and quality of life can terribly
suffer and lead to much more expensive care.
I have spoken to all seniors around Oregon. If there's an
issue on their minds, it is prescription drugs that resonates
most clearly. I feel strongly that the loss of one's health
should not be the loss of one's home, and I have been working
to add prescription drug coverage to the Medicare program, so
that all seniors will have access to affordable drugs.
I regret to tell you that, over the last 3 weeks, the
Senate worked on this. That is before the August recess. We
spent 3 weeks debating and working and amending various
prescription drug proposals. As you already know, we did not
clear the 60 vote threshold that the Senate imposes for all of
these important kinds of issues.
In working with Senator Graham of Florida, my colleague
across the aisle, I tried my best to come up with a compromise
between the two positions that would provide an affordable
benefit to seniors and to government.
But, unfortunately, politics won the day, and I am now
working with him to see if we can't modify our proposal to
reach another agreement to bring the issue up again in
September so that our nation's seniors will not have to wait
yet another Congress for the prescription drug benefit that
they need and deserve.
Now, in the absence of other members of the Senate
committee with us today, I am going to turn to the true experts
in this debate by introducing our witnesses. Today we will hear
testimony from two panels of witnesses. The first witness, Mr.
Bobby Jindal, is the Assistant Secretary for Planning and
Evaluation at the U.S. Department of Health and Human Services.
He has analyzed several prescription drug proposals and can
help us understand the history of Medicare and the effects of
different bills under consideration. Mr. Jindal is also a
former state Medicaid Director from Louisiana.
Mr. Jindal, Oregon welcomes you, and we hope you brought
some Cajun cooking and maybe some Zantac after that. So, Bobby,
before I turn to you----I would like to welcome Mr. Roy Dancer,
a senior citizen from Oregon. He is a retired and distinguished
school teacher. His wife is with him.
How long have you been married?
Mr. Dancer. About 47 years.
Senator Smith. Well, three more and we're going to have a
party. That, folks, is the best success story anybody can
issue. We congratulate you.
In addition to being a school teacher, he will share his
experience of getting access to prescription drugs since
becoming eligible for Medicare.
Mr. Dancer, it is my pleasure to welcome you here, as
well, on this first panel.
Bobby, we'll turn first to you.
STATEMENT OF BOBBY JINDAL, ASSISTANT SECRETARY FOR PLANNING AND
EVALUATION, U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
Mr. Jindal. Thank you, Senator. I also want to thank you on
behalf of the Administration. I was just with the President
down in Texas for his economic summit. I want to thank you on
behalf of the Administration for your leadership and hard work
on this issue. I know you and your staff have worked
tirelessly, as has the Administration, on adding a prescription
drug benefit to Medicare.
It is an honor to be in front of you today. It's an honor
to be here in Oregon, where the weather certainly is cooler
than in my home State of Louisiana.
Senator Smith. You may have trouble selling that to
Oregonians. Global warming is in full force right now.
Mr. Jindal. I do take the opportunity to come to you to
talk about this important topic. As I said, the President is
down in Texas at his economic summit, and one of the messages
that came across loud and clear during the health security
panel, the President made it very clear you cannot have
economic security without health security.
One of the messages that came across very clearly is that a
top priority is that we must make prescription drugs more
affordable to seniors. We must add that benefit to the Medicare
program.
Across the country and around the world, scientists,
doctors, and innovators have developed new technologies and
treatments that weren't even imagined in 1965. The private
sector has been transformed. When you look at modern insurance
today, it would be impossible to provide a comprehensive
medical insurance package to the private sector without
prescription drug coverage.
During that same time, even though Medicare has provided
security for millions of Americans since it was created, it has
not kept pace with the changes in the world around it. Today
the program is threatened by a system that has failed to
deliver health plan options for all seniors and by an outdated
benefits package that includes very limited drug coverage.
President Bush believes very strongly Medicare must be
strengthened and must be improved to meet the needs of the 21st
century, to meet the needs of today's seniors. It is vitally
important for the Congress and the Administration to work
together to fulfill Medicare's promise of health care security
for our nation's seniors and people with disabilities.
To this end, the President is working with Members of
Congress, including yourself and other members from both
parties, to develop a framework for strengthening and improving
Medicare programs.
In July 2001, the President presented a framework that
included the following eight principles. First, all seniors
should have the option of a subsidized prescription drug
benefit as part of a modernized Medicare program. Second,
modernized Medicare provides better coverage and preventative
care for serious illness.
Third, today's beneficiaries and those approaching
retirement should have the option to keep the traditional plan
they prefer with no changes. Fourth, Medicare should make
available better health insurance options like those available
to all Federal employees.
Fifth, Medicare legislation should strengthen the program's
long-term financial security. Sixth, the management of Medicare
should strengthen and improve care for seniors. Seventh,
Medicare's regulations and administrative procedures can be
updated and streamlined while instances of fraud and abuse
should be reduced. Finally, eighth, Medicare should provide
high quality heath care for all seniors.
The President's framework for strengthening Medicare and
improving the program for seniors and disabled Americans calls
for fair payment options for Medicare beneficiaries. Through
their Medicare+Choice plans, a lot of beneficiaries receive
more enhanced benefits than are available under traditional
Medicare. Enhanced benefits can include prescription drugs.
These programs provide better preventative care services and
benefits widely available to millions of Americans who are
working today.
Frequently, private plans are providing Medicare benefits
at a much lower cost as well. Not surprisingly, private plans
have long been the preferred choice for over 5 million Medicare
beneficiaries.
As you know, Medicare+Choice has been particularly popular
with seniors in Oregon, and 28 percent of your beneficiaries
have chosen to enroll in the Medicare+Choice plan, compared to
13 percent of the beneficiaries nationwide.
The Portland area, indeed, was one of the first areas to
participate in Medicare's managed care program and remains one
of the areas where the program is strongest. Six plans serve
beneficiaries in Oregon, and four companies are right here in
Washington County. In addition, three plans offer coverage for
prescription drugs.
In spite of this popularity, however, the future of
Medicare+Choice is in question. Since a new payment system was
implemented in 1998, hundreds of private plans have left the
program or reduced their service areas, adversely affecting
coverage for millions of beneficiaries, reversing what had been
a upward trend in plan availability and enrollment. Here in
Oregon there are 16,000 fewer enrollees now than at the peak
enrollment 2 years ago.
The Administration's proposal is to move toward a more
secure, equitable, and fair payment system for Medicare+Choice
plans. This proposal will modify the current formula to better
reflect actual health care cost increases and allocate
additional resources to counties that most need them.
This will make it possible for more private plans to remain
with Medicare. Proposals to help sustain plan choices in
Medicare are supported by both Democrats and Republicans.
The President has also proposed a new system for new types
of plans to enter the program to encourage a variety of new
plans, like preferred provider organizations, to participate.
Even though these are incredibly popular in the under 65
population, there are currently few or no such choices in the
Medicare program. Just in the next few days we're rolling out a
demonstration program to encourage these types of options to be
available to today's seniors.
Another important step in bringing Medicare into the 21st
century is we are forming Medigap plans. Two-thirds of seniors
rely on individual or employer sponsored supplement plans, and
yet Medigap premiums have been rising at an alarming rate.
In the current Medigap structure, all plans offer first
dollar wrap-around coverage, and yet there are two problems for
these plans. First, they are expensive for beneficiaries; and,
second, they do not offer beneficiaries the benefits they want,
and create incentives for excess utilization.
According to a recent study by the HSS, it is far easier
for beneficiaries to buy foreign travel insurance than to buy
prescription drug coverage under Medigap. It is clear most
people would prefer drug coverage.
The President, therefore, has proposed adding two new
Medigap plans to the existing ten. The new plans would offer
prescription drug coverage to protect beneficiaries against
catastrophic health care costs and include modern beneficiary
cost sharing. For these changes, they are expected to offer a
more affordable price than the existing popular Medigap plans.
As you know, since his first days in office, the Secretary
of Health and Human Services, Tommy Thompson, has made the
prevention of disease one of his top priorities. He has often
said, our current medical system waits too long, and it's far
more expensive and far less effective to treat disease after
the fact.
The Administration is determined to promote prevention of
disease by eliminating barriers for beneficiaries. Yet today,
beneficiaries who receive screening for osteoporosis, for
breast, prostate or colorectal cancer, must first meet the
deductible, or pay a 20 percent copay, or both.
Beneficiaries who need diabetes self-management education
and training, which is important to maintain control of
diabetes in reducing mortality, also face that kind of cost.
Under the President's proposal, all these important preventive
services will be excluded from the deductible and from co-
payments. In other words, we would make free to seniors the
type of preventative care that also reduces cost for the
program.
In June, the House of Representatives took a step in the
right direction by passing a bill calling for these changes.
Furthermore, as the Secretary has made clear, we are committed
to helping Americans to prevent and reduce disease by
encouraging changes in diet and exercise.
These are important elements in our plan to strengthen and
improvement the Medicare program. The most pressing challenge
remains the lack of drug coverage among seniors. Seventy-seven
percent of seniors have some prescription drug coverage today,
but 10 million beneficiaries do not.
Forty percent of these beneficiaries earn less than 150
percent of the poverty level. In fact, those beneficiaries that
do not have coverage through private insurance are the only
Americans today, along with the uninsured, who commonly pay
full price for prescription drugs.
Just as you said, beneficiaries without drug coverage spent
$617 for drugs out of their own pockets, compared to only $352
for those with coverage. That is simply unacceptable, and the
problem must be addressed.
Significant numbers of beneficiaries face unprecedented
difficulties in obtaining drugs at a time when drug therapies
have become more important than ever in treating and preventing
diseases. Recent breakthroughs and those still in the pipeline
have and will continue to transform treatment of many terrible
diseases.
For example, there are now several new treatments in the
pipeline to treat high cholesterol, including drugs designed to
interfere with the body's absorption of the cholesterol, and
that could actually prevent the conversion of the good into the
bad cholesterol, HDL to LDL. But these and other breakthroughs,
as exciting as they are, will not help our seniors if they have
no means to attain them or afford them.
For this reason, the program needs a drug benefit that will
allow such innovations out of the lab and into the medicine
cabinet without stifling future innovations. Many in Congress
have supported a variety of reform proposals, and yet one of
the concerns of the Administration is that, under any of these
proposals, it will take at least until 2005 to get a
comprehensive drug benefit up and running.
Seniors need help now, and there are steps that can be
taken now--for example, low income subsidies and other steps--
to help seniors become immediately a part of a larger, overall
comprehensive legislation, not as a substitute, but rather as a
first step.
Make no mistake. We are committed to strengthening
Medicare. We are committed to providing a meaningful
prescription drug benefit for all of America's seniors and
people with disabilities, and we are also committed to
providing assistance immediately.
Last year, the President took the first step when he
proposed a creation of a new mandatory endorsed drug card
initiative. The house endorsed the plan, and the Administration
is hopeful the Senate will, as well.
The drug card is not a drug benefit and it's not a
substitute for one. It is, however, an important first step in
helping seniors afford the drugs they need today. It is modeled
on private health insurance programs where seniors benefit,
where they are receiving discounts of 10 to 35 percent.
Under the President's proposal, Medicare endorses private
drug cards that meet certain standards, and seniors get
information they need to obtain manufacturer discounts and
other available pharmacy services.
These plans negotiate discounts and rebates directly from
drug companies and pass the savings on to beneficiaries who
choose to participate. Beneficiaries could switch cards, and
they would not be charged more than a nominal, annual
enrollment fee, to make sure that they get the best discounts,
the best prices on drugs, but also get services like drug
interaction programs and other services designed to promote
preventative care and to reduce medical errors.
The Administration has also proposed immediate support for
a comprehensive drug benefit for Medicare beneficiaries up to
150 percent of poverty, or about $18,000 for a family of two.
This program, called the transitional Medicare low income
drug assistance program, would expand existing administrative
structures operated by the States that already serve the low
income and would also allow the States to use the new low
income drug card to provide low income assistance for other
seniors.
As an incentive, Medicare would pay for 90 percent of the
cost of the program to serve the seniors who live in 100
percent to 150 percent of poverty. This policy is projected to
expand coverage to 3 million beneficiaries and would also allow
the States to use the new low income drug card to provide low
income assistance for other seniors.
As an incentive, Medicare would pay for 90 percent of the
cost of the program to serve seniors in 100 to 150 percent of
poverty. This policy is expected to expand drug coverage to 3
million beneficiaries who don't have drug coverage today.
Combined with the low income assistance, the drug card, the
Administration is also doing something today, while Congress
continues to deliberate the comprehensive legislation, called
Pharmacy Plus. This is a program that allows States to provide
a drug card for Medicare beneficiaries up to 200 percent of
poverty. We've already approved Pharmacy Plus for over 800,000
people in five States and received other applications from an
additional five States.
I would like to close by saying the President is committed
to working with Congress to enact legislation consistent with
his principles. By strengthening and improving Medicare and
putting prescription drug benefits in place, we can keep the
promises we made to seniors and disabled Americans today and
for those who will rely on Medicare tomorrow.
The Administration and Congress must take this opportunity
to take important steps to strengthen and improve the program.
Seniors should have a program to provide better benefits,
better value both for them and for the government, a program
that is fiscally sound, does not cause disruption to but that
strengthens the coverage they currently have and continues the
rapid pace of medical innovation which will bring tomorrow's
cures to America's seniors.
On June 28, the U.S. House passed the Medicare
Modernization and Prescription Drug Act of 2002, H.R. 4954, a
good step toward making Medicare a better prescription drug
program for all seniors. The Senate now has an opportunity to
follow the house's example. We believe by working together,
seniors can have a Medicare program that fulfills the promise
of secure and vibrant retirement.
Senator Smith, I will close where I started. Again, I came
to Portland directly from Texas, from the President's economic
summit, where time and time again the President heard from real
Americans like you're doing today, senior Americans saying that
we must make prescription drugs more affordable.
I will also close again by thanking you for your
leadership. The Secretary and the President send their personal
regards, and they want to tell you again how much they
appreciate the hard work you're doing to make the Medicare drug
benefit a real part of the program.
[The prepared statement of Mr. Jindal follows:]
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Senator Smith. Thank you, Bobby.
I think one of the biggest debates, in the Senate anyway,
and I am sure it is in the House, is the delivery system a
prescription drug benefit we would use. Everybody agrees that
there ought to be a prescription drug benefit system. The
debate is over two ways, both of which can work, and the
question is, what do people want and which will work the best?
You can do it through Medicare. In other words, the
government manages these things, and it does it under a
formulary, or you can do it through existing private insurance,
and that can work, as well. Some insurance companies say
they're interested and others say they're not. I have voted for
both versions, anxious to get something to conference so we can
get something to the President and get some relief quickly.
I think what you're telling me is that the discount card
that you've come up with can be done immediately, and that is
not a substitute for one of the other two delivery systems.
Mr. Jindal. That is correct. Senator, you know, I applaud
you. I know that you've been very willing to work in a
bipartisan way to move this thing forward. Today's seniors in
America want the drug benefit, and we agree with you.
We obviously believe that a delivery system should preserve
within the private sector the innovations that are happening.
We don't want to see something where the government is picking
which drugs seniors can receive access to. We think it's better
to give seniors options and want them to decide, and their
doctors to decide, which medicines they get.
Like you, we also agree it doesn't make any sense to wait
and continue fighting. The drug card is something that can be
done right away. The low income assistance program is a program
that can be done right away, as the Medigap options. Pharmacy
Plus has already provided drug coverage to 800,000 seniors and
will probably serve several more.
The Medigap reforms I am talking about can provide coverage
for another 1.5 million seniors, including half of them whom
that don't have coverage today. The low income program can
provide coverage to 3 million seniors.
The drug discount card can provide 15 to 35 percent
discounts to every senior. None of these is a substitute for
comprehensive coverage. But you're absolutely right; that is
one way we can take some immediate first steps while we put in
place the more comprehensive coverage that serves every senior.
Senator Smith. Just so you all know, the way I evaluated
two bills and, frankly, the reason I supported the compromise,
was my democratic colleague, Bob Graham. The democratic bill
had two major flaws.
I don't have a problem with Medicaid or Medicare being the
delivery system, frankly. It can work, and so can the other
way. But it had two horrendous flaws. It was very open-ended in
terms of availability and very little in terms of deductibles
and things like that of requirements on Medicare.
But it was sunseted--I mean, the program ended in 7 years.
Moreover, it had a formulary in order to control the cost that
was so limited that it only offered 10 percent of current
available prescription drugs. That's all you could get.
I voted against that bill for that reason; in particular,
the gimmick of the sunset, No. 1, and, frankly, a formulary
that said the government was substituting its judgment for the
prescriptions you need for that of your doctor. So I found that
that policy was just wrong. It was very limited.
The Republican version, the version used in a private
sector delivery, had a much more generous formulary system and
ultimately left more discretion to you and your doctors to get
what you need.
So these are the tradeoffs that you get, unless you're
prepared to say everything is free, in which event, we're
really fooling you. You've got to draw some lines, and this is
the fight between the two contending views. But the frustrating
part is that we're close, and we ought to get it done in this
Congress and not the next.
Bobby, before I let you go, I have a couple other comments.
Ron Wyden and I have been fighting pretty hard to get
additional money for the Medicare+Choice program, and that's
something that is very popular in Oregon. I wonder if the Bush
Administration will support additional funding for that.
Mr. Jindal. Absolutely, and we do applaud you and your
fellow Senator from Oregon for doing that and for sending a
letter to Senator Daschle and others. As part of the
Administration's 2003 budget, we ask that Medicare providers be
reimbursed in the budget in a neutral way, so that any
additional spending will go to benefit beneficiaries.
One exception that we made was to say that we do think
there needs to be additional funding for the Medicare+Choice
program to stabilize enrollment and to provide those options
that seniors want. I am not saying that everybody will want
that and that anybody should have to be forced to choose that,
but rather to say, for seniors that want those choices, they
should have those choices. They should have those choices.
We do support efforts to stabilize that program. Since
1998, up until 1998, the program was flourishing, it was
growing, providing more and more options, low premium programs,
no premium programs for prescription drug coverage.
Since 1998, since those changes in many counties, these
programs have received 2 percent updates per year. Anybody that
has been reading the newspapers, anybody that's been watching
the news, knows that medical inflation has been growing at a
much higher rate than 2 percent per year.
So when you look at the cumulative effect, we had plans
over the last several years that maybe received 11 percent
inflation updates, whereas the government program received much
more than that.
So all we're saying is, let's simply balance the playing
field. Let's give those clients additional resources so they
can continue offering preventive services and lower payments
for seniors.
Senator Smith. Bobby, has the Administration done any
estimating in terms of savings to Medicare in terms of hospital
costs with the addition of a prescription drug benefit? I would
be interested to know what those savings are. The way these
plans were costed out, they ranged anywhere from $370 billion
over 10 years to $570 billion. But, in truth, one plan was
probably a trillion dollars over 10 years, if the real costs
were totaled up.
So I guess my question is, OK, those are potentially the
costs. What are the savings? Do you have a calculation there?
Mr. Jindal. I think you're absolutely right to ask that
question. Part of the rationale in the Pharmacy Plus is we're
allowing States who serve already 800,000 seniors and a lot of
additional States to serve more. We know if we provide
prescription drug coverage, we will keep seniors out of
hospitals, out of nursing homes with a more comprehensive
Medicaid package.
Up until now it's been all or nothing. You needed every
benefit and you had to spend down into poverty or you'd get no
assistance. Well, we're telling States it's more cost effective
for the government to provide prescription drug assistance to
help keep seniors out of the nursing homes, out of the
hospitals, and living in the community.
In terms of the more comprehensive Medicare benefit, I know
this is an issue that's been debated frequently by government
actuaries and nonpartisan actuaries that do these form of
estimates for Republicans and Democrats both. They continue to
go back and forth on this question that I am exploring.
The Secretary is a strong believer--for example, not only
will prescription drugs have some offsetting savings in other
parts of the program, but adding things like preventive
benefits will also have savings, doing things like allowing
seniors to have free access to these types of screenings. The
house added an upfront physical if you join the program, so
your doctor can get an assessment of services you might need.
He's a strong believer that prevents other health care
spending. This contingency is a source of debate. What other
nonpartisan experts look at, they've never given us a
tremendous number of savings. They've scored, for example,
preventive services being quite expensive and will continue to
do that.
Senator Smith. Thank you, Bobby.
Mr. Jindal. Thank you, Senator.
Senator Smith. Roy Dancer.
STATEMENT OF ROY DANCER, RETIRED EDUCATOR AND SENIOR CITIZEN
Mr. Dancer. Thank you, Senator, for the opportunity to come
and make our presentation.
My name is Roy Dancer, and I reside at 108080 Southwest
Davies Road, Beaverton, OR, 97008. I was born in Oregon, I was
raised in Oregon, I was educated in Oregon, and I have lived in
Oregon my entire life. I am 76 years old, and I reside at
Hearthstone and Murray Hill with 165 other senior citizens.
In the last 2 weeks, I have gone around at both lunch and
dinnertime and visited with every table in the lunchroom and
the dining hall of both the assisted living and the independent
living, and my comments today are made from those observations
and conversations with my fellow senior citizens.
I am certain that I speak for many of them this morning
regarding the high cost of prescription drugs and how it has
greatly impacted their standard of living. My wife is 77-years
old. I didn't mean to point out that I married an older woman,
but she is 5 months older than I am.
Senator Smith. You may not make that 50 years after all.
Mr. Dancer. I think she has her cane with her this morning.
I have heart disease which has resulted in numerous
surgeries, including several angioplasties and two triple
bypass, one 2 years ago in October, plus I have ulcers. My
ulcer is kept under control by a prescription drug twice per
day at a cost of $121 per month. Currently I am taking eight
prescription drugs daily. I am far over the average that you
found earlier.
My wife, Betty, is being treated for her high blood
pressure, her diabetes, and her arthritis. Betty's drug
prescriptions are also sky high. Betty and I spent over $5400
last year, as documented on our Federal income tax, over and
above insurance. This was an out-of-pocket expense. Betty has
Blue Cross HMO, and I have Medicare and an ODS supplement. The
$5400 was over and above insurance. I don't know what people do
without insurance.
I have talked to residents throughout our retirement
community, and I discovered several of them have out-of-pocket
expenses for prescription drugs which have exceeded $5,000 last
year. I thought we were the only ones; we're not. I talked to
one resident last week who has drug expenses which exceed $700
per month, and she has no insurance.
Three years ago when we were in Arizona visiting our
daughter and family, Betty and I traveled to Mexico to buy
prescription drugs and found them to be much cheaper. For
example, my wife had paid $320 for a 3-month supply of two of
her drugs here in the United States. In Mexico she bought a 6-
month supply of not only those two drugs but six other
prescriptions for $340. We're wondering why the difference
between Mexico and the United States.
Carol Wiley, a 63-year-old cancer patient, saves over 80
percent of the retail price of her drugs by ordering from a
Canadian mail order company. Carol buys one drug, which costs
$52.50 U.S. money for 100 tablets of 20 milligram tablets.
Portland area pharmacies charge her $300, six times that
amount, for 100 tablets.
This is related in the Northwest Senior Life, August 2002,
page 30. The Hillsboro Argus reported last week that
prescription drugs had gone up over 30 percent in the last
year, much higher than the cost of living.
Oh, a member of our community came up to me this morning
and told me that she had ordered a drug 2 months ago, got a 60-
day supply, went to reorder it yesterday, and the increased
cost of the same drug, same company, had gone up 10 percent in
2 months. That's 10 percent in 2 months, 30 percent over the
course of the year.
For us senior citizens who are on a fixed income, it is
imperative that Congress give us major relief on our
prescription drugs now. Thank you.
[The prepared statement of Mr. Dancer follows:]
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Senator Smith. Do you think your experience that you've
just testified to is not just your experience but everybody you
live with at the center?
Mr. Dancer. Yes. As I said, I went around and visited every
table in both the assisted living and the independent living,
got ideas from them, and talked to them about the cost of their
drugs. You know, I went to a table and said, what do you think
about the high cost of prescription drugs? I went down like you
did and said, how many of you spent over $100 last month? Then
when I got to this $700, I almost fainted.
Senator Smith. You know, I think one of the factors of the
debate between Canada and Mexico versus us, we just have to
admit and understand as American people that the pharmaceutical
industry is located in the United States, not in other
countries. Even foreign developers, they come here for the
simple reason that we are not a socialist system in terms of
producing pharmaceuticals.
As a result of that, there is still a profit motive that is
there. There have been abuses by pharmaceutical companies in
terms of patents and things. We passed a bill to stop those
before we left Congress. We hope that gets out of conference
and the President signs it. We're certain he will.
There is also another, yet another bill, in terms of re-
importing from Canada or Mexico, drugs that they buy through
their national governments. There is one side of this story
that everybody ought to understand. You can go to Canada or
Mexico to buy some drugs; you cannot go there to buy all drugs.
Because their governments, frankly, are riding on the back of
our private industry to buy in volume what they approve on
their formulary, and I don't know how expensive their formulary
is.
But the other untold story is of Canadians coming to
America to buy the miracle drugs because their government,
through their taxpayers, do not buy those drugs. So you and I--
unfortunately, are bearing the burden of other countries who
buy in volume or, through their provinces, large amounts of a
number of prescription drugs.
We buy individually or through our insurance plans. What we
have to do is simply figure out how to better pool, either
through Medicare or insurance companies or larger groups, ways
to buy a generous enough group of drugs under a formulary that
would cover 90 percent, not 10 percent of your needs.
In answer to your question, why the difference, that is the
difference, and we are on the case. We've got to finish the
deal.
Thank you very much for your excellent testimony.
Senator Smith. Now, we will invite our second panel
forward. We'll begin with Ms. Lydia Lissman, Assistant Director
for seniors and people with disabilities for the Oregon
Department of Health Services.
Ms. Lissman, better than anyone else I know, can describe
the characteristics and demographics of seniors in Oregon, as
well as future trends. Ms. Lissman, the committee welcomes you,
and thanks you for being here.
Our final witness will be Dr. Michael Kositch. Dr. Kositch
is the Medical Director of the operations and primary care
services at Kaiser Permanente Northwest. Dr. Kositch will
address the clinical aspects of prescription drug use and the
availability of Medicare benefits, beneficiaries for
Medicare+Choice enrollees at Kaiser Permanente.
Dr. Kositch, the committee also welcomes you. But Ms.
Lissman, we'll start with you.
Ms. Lissman. Thank you.
STATEMENT OF LYDIA LISSMAN, ASSISTANT DIRECTOR, OREGON
DEPARTMENT OF HUMAN SERVICES, SENIORS AND PEOPLE WITH
DISABILITIES
Ms. Lissman. Good morning, Senator Smith. I am Lydia
Lissman, Assistant Director for the Oregon Department of Human
Services, and I am responsible for the statewide programs and
policies for seniors and people with disabilities.
I am also the Director of the State unit on aging,
responsible for programs and services that are provided through
the Older American Act.
First of all, Senator Smith, before I begin with my
testimony, I would like to thank you for your efforts to
increase the Federal medical assistance percentage as a part of
the prescription drug initiatives considered last month in the
Senate.
As you know, Oregon's economy lags severely behind many
other States, while the demand for human services has been on
the rise, so we sincerely appreciate your recognition of this
reality.
I also want to thank you today for holding this field
hearing to look at the impact of prescription drugs on Oregon
seniors. My written testimony today touches on a number of
issues, and I am going to limit my remarks this morning to a
couple of things.
I am going to touch upon the demographic issues and changes
a little bit on access and payment, and then I am going to talk
a little bit about one of Oregon's own efforts to better serve
seniors in the area of prescription drugs. Last, but not least,
I will offer a few recommendations that will echo what you have
heard from the first two presenters.
Seniors represent a very large and growing portion of
Oregon's population. Between now and the year 2030, our State
will experience an unprecedented shift in the age of our
population. According to the U.S. census in the year 2000, the
population in Oregon that was 65 or over the age of 65 was
nearly 13 percent of the total Oregon population. That is a
little bit higher than the national average, which is just over
12 percent. But what is significant is that by the year 2030,
which really isn't that very far off, the senior population
will comprise more than 20 percent of the Oregon population.
What's really important to know about now is there are
areas of Oregon, counties in Oregon, that are already at or
above 25 percent of their population being the age of 65 or
older. There are areas that are seeing very rapid growth. Some
of those include Coos, Curry, Jackson, Josephine, and Deschutes
counties. In those areas, we have fast approached that point.
Senator Smith. So 25 percent are at 65 and older in those
rural counties?
Ms. Lissman. They are getting very close to that, yes, in
those rural counties. Because we have had unprecedented growth,
and some of these areas have been very popular areas
for seniors to either locate in for retirement, or they have
been areas where, in fact, the population is simply aging. We
don't have as many young people coming into the area or people
staying in the area, which is, in part, reflective of the
economic environment that we have.
Senator Smith. Maybe housing and fixed costs like that, are
cheaper there, so they are not coming, moving to populated
areas.
Ms. Lissman. Those are some of the issues, as well. So in
some of the areas we have people staying. But again, because of
the economic issues, families are not moving into those areas,
so the proportion of the population that is older is
disproportionate to other areas.
Medications play a very crucial role, as you've heard
today, in maintaining and managing the health of Oregonians
and, in particular, seniors. I think the last presenter
certainly illustrated that.
Slightly more than 37,000, out of a total of 438,000,
seniors in Oregon receive Medicaid. I think people are aware of
the very low standards of income and assets to qualify for
Medicaid. While seniors represent about 8.9 percent of the
total number of Medicaid recipients in Oregon, this group
accounts for 23 percent of all the Medicaid pharmacy
expenditures in this State.
It is estimated that slightly over 30 percent of all the
seniors in Oregon have income below 200 percent of the Federal
poverty level. That is a significant number. I think, again,
this is reflective, in part, of the cost of living increases
we've seen over time, inflation.
Senator Smith. Can you state that number again for the
record, please?
Ms. Lissman. Slightly over 30 percent of seniors in Oregon
have incomes below 200 percent of the Federal poverty level.
Senator Smith. You know, it's interesting. The bill Senator
Graham and I produced, it covered seniors at 100 percent of
coverage. Below 200 percent of poverty, the average in the
Nation is, it would have covered about 47 percent of seniors.
Nearly half of seniors live at 200 percent below the poverty
level, which is pretty remarkable, actually. We're relatively
better off than many other places in the country.
Ms. Lissman. There are several major issues that affect
seniors and their access to vital prescription medications, and
you've heard about a couple of those today.
Again, I have some information in my written testimony, but
certainly access and ability to pay is a significant issue, and
I am going to talk a little bit more about that. But medication
management, chronic disease self-management, and medication
administration are very significant issues, and those also have
been mentioned.
What I would say about the access and cost is that seniors
make a lot of dangerous choices in Oregon, as they do in other
places, because of the expense of prescription drugs. Some of
them forego even filling prescriptions or they forego some of
these prescriptions that are newer prescriptions and perhaps
more costly and have a significant impact on the quality and
length of their lives.
They skip dosages or they reduce dosages or they try
cheaper remedies. Noncompliance with what a physician indicates
is required for their prescriptions results in very poor health
outcomes, and those range from progression of a chronic disease
to increase in preventable complications and disability.
Let me tell you from a State's perspective, as has been
mentioned, and as you yourself mentioned, Senator Smith, it not
only results in a very significant impact on the quality of
lives, but on loss of productivity and on the increase of costs
as a result of avoidable hospitalizations and premature need
for long-term care services.
Certainly what I hear from our field offices is that we see
people who come into the long-term care system because their
condition has degenerated as a result of either the lack of
appropriate use of prescriptions or the lack of prescriptions,
and those are very significant issues. This increased cost is
borne by both the public and private sector, so there is
definitely a shift of cost related to this.
What I would like to talk about now, very briefly, is one
of the efforts that Oregon is making to seek some solution, but
I also want to point out there are some real limitations to
this solution. In the last Oregon legislative session in 2001,
the Oregon legislature authorized a senior prescription drug
program.
This is a program that seniors will be able to apply for.
It's hoped that it will become available and implemented in
November of this year. It's a one-page application, and, for a
$50 fee, Oregonians over 65 with incomes less than 185 percent
of the Federal poverty level will be able to purchase their
medications at the current Medicaid rate.
The current Medicaid rate is 100 percent of the average
wholesale price minus 14 percent, so that will be available to
Oregonians. We estimate that somewhere around 100,000 seniors
may be eligible.
But the important thing here I want to point out is that
there is also an asset limitation, and it mirrors the asset
limitations for Medicaid that's $2,000. That's a very small
amount of assets. It does not include your home or vehicle, but
that is not very much in terms of----
Senator Smith. Anything above that disqualifies you?
Ms. Lissman. That's correct.
Senator Smith. So 200 percent of poverty is----
Ms. Lissman. 185 percent for one individual senior would be
roughly $1,366 a month gross.
There are a number of other things. But first, let me move
now to my closing remarks, which would be the things that, from
my perspective, I really want to encourage the Special
Committee on Aging to pursue. Certainly foremost is the
coverage of prescription medications through the Medicare
program.
This is extremely important to maintaining the health of
our aging Oregonians and to reducing both the Medicare and
Medicaid acute and long-term care costs. We encourage you to
support Medicare coverage for medication and chronic disease
management that has been mentioned previously, and we encourage
you to urge the pharmaceutical industry to consolidate and
simplify and provide outreach for their reduced cost of
medication programs.
I want to acknowledge that they do have these programs, and
I want to acknowledge our Area's Agencies on Aging who really
make every attempt to connect our senior population with those
programs. But much more needs to be done in that arena, and
there's certainly not funding locally to support that.
I want to encourage the committee also to seek and, where
possible, fund solutions to what is a crisis in this country, a
growing crisis, around the work force shortage of nursing and
other caregivers. Very important.
Also, it's important to support those efforts that are
being made around national caregivers and family caregivers for
our aging population; and last, to fund Medicare coverage of
technology. There's terrific new technology that's emerging in
the area of medication and administration, including the smart
pill bottles, and technology that can remind people to take
medications that are very important for seniors to remain safe
and independent.
I want to thank you for the opportunity to share my
thoughts on this challenging issue, and I want to commit to you
that we look forward to working with you and our other Federal
partners to identify solutions to what is a very difficult and
challenging problem that is very much to the hearts and minds
of our senior population here in Oregon.
[The prepared statement of Ms. Lissman follows:]
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Senator Smith. Lydia, thank you, for your excellent
testimony. The point of this hearing is to get an Oregon
perspective on the prescription drug issue, and you did that
very, very nicely.
Dr. Kositch, welcome. It is nice to have you here.
STATEMENT OF MICHAEL KOSITCH, M.D., MEDICAL DIRECTOR FOR
PRIMARY CARE SERVICES, KAISER PERMANENTE NORTHWEST REGION
Dr. Kositch. Thank you for the opportunity to speak to you
today about the role of prescription drugs and health care
needs of our Oregon senior citizens.
I have been in the practice of medicine for over 15 years
here in Oregon, and I am certified in both internal medicine
and geriatric medicine. I work with Kaiser Permanente
Northwest, which is a fully integrated health care system that
operates in Portland and Salem in Oregon, as well as Southwest
Washington.
Our regional membership is 450,000. 225,000 members live in
Oregon and 128,000 are in Washington. Among those members we
have 46,000 Medicare members, 42,000 enrolled in our Senior
Advantage, our Medicare+Choice program, and also 4,000 in our
Senior Advantage II, our social HMO program.
In the early part of the 20th century, discovery of the
first effective antibiotics was the beginning of the
development of effective medical prescriptions as a fundamental
tool in providing quality healthy care. Now, medications are
very much the cornerstone of nearly all medical care,
particularly for the elderly who struggle with a large number
of chronic illnesses.
Innovations in pharmaceuticals over the last half of the
last century have contributed to a substantial increase of
lifespan and an improved quality of that longer life for all
Americans. In the 20th century, prescription drugs are now
irreplaceable tools that physicians use in the treatment of
acute and mostly chronic illnesses affecting the disabled and
those over 65. I believe that the medications enable practicing
physicians to shorten the hospital length of stays and, in some
cases, eliminate need for hospitalization. For example----
Senator Smith. Do you have a number on that, a percentage?
Dr. Kositch. No, I think it's too hard to separate it from
everything else that's gone on with diet and exercise in our
society, and to attribute it all to one cause is unfair.
Senator Smith. But it's reasonable to deduce from that
there would be some savings on hospital and other acute care?
Dr. Kositch. Yes, on an annual basis. The quandary is is
that we will lengthen people's lives. If you lengthen people's
lives, they will use more health care. I can tell you
individuals may use more costs over the rest of their lives,
but I can tell you individuals will use less cost in a given
year.
An example along those lines is, 40 years ago, a 65-year-
old man who suffered a heart attack, a myocardial infarction,
frequently was hospitalized for 3 weeks and usually was unable
to resume work or any--he was advised not to do any physical
activities at all recreationally.
Now, many times that person doesn't have that heart attack
or has it much later in life. If they have that heart attack,
they might expect only 3 to 6 days in the hospital, and they
have a very good expectation of eventually resuming a level of
activity similar to what they had before.
As with any tool, these prescriptions, to be effective,
have to be used according to specific instructions. Dosage
strength, frequency of admission, and the duration of treatment
all are key in predicting the benefits. When any of these
parameters are changed or interrupted, the expected outcome
will be altered and may not be achieved at all.
That means that the benefits that patients take their
medicines for may not ever occur. Compliance with the drug
administration is important to getting those successes. But
when a barrier exists to the use of prescription drug
medicines, high quality effective health care that is available
in the 21st century is compromised.
Among senior citizens, the most disturbing barrier for
prescription drug usage is the financial cost. The difficulty
in admitting patients to obtain these benefits creates an
inability to get the services that we can give them in modern
medical care. Patients are frequently having to choose whether
they can afford their medicines.
This problem exists in Oregon as well as throughout the
country. Seniors choose either to forego the prescribed
medicine altogether, or they make choices about which medicine
to fill, sometimes eliminating the medicine that has the most
benefit for preventing future complications in favor of one
that is either more affordable or one that perhaps minimizes
their symptoms.
Many of these patients, as a result, may live in pain, may
see their condition not improve as we can hope for, or actually
experience a worsening of their condition due to the cost of
prescription medicine.
Senator Smith. Doctor, along that point, I think what we've
seen a lot of seniors do is to emphasize what it means when a
senior will reduce the dosage, cut it in pieces, stretch it
out. What is the impact of that, in your medical opinion?
Dr. Kositch. Well, the three most common chronic diseases
in our elderly Americans are hypertension, diabetes, and high
cholesterol. In each one of those medicines, the benefits of
treatment are in many ways proportional to the degree of
reduction in the abnormal blood values that they monitor.
So by reducing your dose in half, crudely, one can say
you're getting half the benefit. It's better than nothing, and
I am thankful that they do take some. But there are more
opportunities for it improving the health, delaying first major
events, and improving the quality of that longer life, as well.
Senator Smith. In the converse of that, my wife always
tells me, if one works, that doesn't mean two works better.
Dr. Kositch. I do encourage my patients, as your wife does,
to talk to their doctor first before making that change.
Now, I am proud to report that for Kaiser Permanente
members here in Oregon and Washington, the situation may not be
quite as bad as it is for many other Americans, because both of
our Medicare+Choice plans offer a prescription drug benefit and
always have since the early 1980's when these programs were
first offered.
It is the policy and practice of Kaiser Permanente
Northwest to offer a comprehensive health plan, and the
definition of a comprehensive health plan includes some
prescription benefit. As a physician, I work at Kaiser
Permanente because I knew an inability to use prescriptions
would effectively tie my hands in helping patients.
In our standard plan, prescriptions are covered at a 30
percent benefit, and the out-of-pocket outlay for a member is
capped, so they would pay no more than $75 for one
prescription.
In our social HMO, Medicare+Choice program, Senior
Advantage II, we offer one of the most comprehensive programs
in the Nation. A member only pays a $10 copayment for generic
and a $20 copayment for brand name drugs. There is not an
annual drug dollar limit on the pharmacy benefit, and it does
not expire.
Last, I would like to thank you, Senator Smith, for
introducing Senate bill 2782 to propose making Senior Advantage
II a permanent rather than a demonstration project. In many
ways, the social HMO is the preferred health care model for the
future, I believe, and I thank you for your foresight in
leadership in converting this product from a time-limited
demonstration product to perhaps a permanent offering for all
Oregonians.
[The prepared statement of Dr. Kositch follows:]
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Senator Smith. Thank you, Doctor.
I talked earlier about the delivery system; do you do it
through Medicare or do you use private insurance? You work for
a private insurance company, an HMO, and a good one, from
everything I have ever heard. I am wondering if you think that
the private sector can carry this benefit to our Medicare
population.
Dr. Kositch. Well, it's a complex question. I think either
delivery system creates its own complexities. Speaking to your
earlier comments, your concerns about a formulary restricted
from 90 percent of the medicines is the one that I have concern
about. It's quite clear to me that marketing by pharmaceutical
companies, that they can drive demand for medications which are
more expensive but are not more effective in any scientifically
proven way.
In covering 90 percent of the medicines, it looks to me
like it's Medicare encouraging that sort of behavior rather
than encouraging a cost effective prescribing to be done by
physicians and used by their patients. I welcome discussion
from my patients when they say, is there another medicine that
works as well as that but doesn't cost as much?
I think if you cover 90 percent, there's no incentive for a
drug company to create a cost effective medicine, only one that
has a good ad budget.
Senator Smith. That's a wonderful question. Everybody has
probably followed the whole debate about formularies and are
much more educated than most folks about this very issue the
doctor has cited, and it is really one that deserves the best
thinking we can put to it.
In my view, 10 percent of available medicine was a fatal
flaw of the proposal of the other side and warranted a no vote
on my part. But 90 percent, you're saying, is too much. What
is, you know, the Goldilocks? What is just right?
Dr. Kositch. It's a process rather than a number.
Senator Smith. OK.
Dr. Kositch. We currently don't have a standard, but the
FDA could easily be a group that was charged to take evidence
based medicine and indicate which medicines are cost effective
within a certain range.
I believe the economic forces that drive pharmaceutical
companies could cause them to have a certain interest in that.
Just as the elaborate rules around patent expiration and
extension that you dealt with, a formal Federal review of cost
effectiveness would put a counterweight, and what percentage of
medication on a formulary--somewhere between 10 and 90 is a
fine number with me. It's the process of getting to a second
part of the conversation, I think, is a more important part.
Because I can live with even 90 percent if it's 90 percent
that an objective agency is looking at and saying, these
medicines make sense, not that these medicines just don't hurt
you.
Senator Smith. A formulary should have enough, not
flexibility but adaptability that, as new drugs are developed,
some can be added and others can be dropped.
Dr. Kositch. Absolutely. In our organization, one of my
colleagues sits on committees as a physician, and they review
dozens of medicines every month trying to understand, is this a
new medicine bringing a new benefit? Is this a new medicine
bringing the same benefit or more convenience or better cost or
better safety, or is this just what we call a me too medicine,
another medicine that someone else can put on an ad and have
patients say, I want the new thing.
Senator Smith. Doctor, it's been very, very helpful.
We do have 15 minutes remaining in this hearing, I believe,
and so we do have some time for questions from the audience of
our panel. We invite the earlier witnesses to come forward, and
I will read the questions you've turned in in the order I
received them.
So the first one is by Dick Means. Dick says, when doctors
prescribe more and when seniors take more than they need,
should prescription drugs become a government benefit?
Many of you might have that thought. Would doctors churn
this system? Would they give more than the seniors need if the
government took it over? In other words, if everything is
free----
Dr. Kositch. People could take more. Would they take too
much? I think it goes to your belief of the human condition.
Because I would believe it's always good to have some
recognition of the cost. On the other hand, no one likes going
up to open up one of those impossible-to-open bottles and
taking out one of those impossibly small pills and putting it
in their mouth three times a day.
Senator Smith. The next question is by Phyllis Rand. Will
lawmakers act to get a prescription drug benefit in Medicare
this year?
I think, honestly, the chance is sort of 50/50, and I will
explain why. We are in the middle of a political season. I have
been in politics for 10 years, and what I have noticed is that,
after each election, when the Congress or legislature goes back
into session, there's a window of opportunity where problem
solvers can form majorities across the aisle, and you can
actually make policy.
As you get closer to elections, politics trump policy.
That's an unfortunate thing, but it's part of our democratic
process, and it leads to an election that will lead, in some
cases, to new players and in a new dynamic that leads you back
to making policy.
Having said that, I would say the political imperative on
this issue is so acute that I think both sides have incentive
to revisit this issue in September. If we do, I think we can
get something. We should get something that hits 60 votes in
the Senate and then goes to a House/Senate conference, which
then works with the White House to come up with a final
package, goes to the White House for the President's signature.
I think it's a 50/50 proposition. But if we don't get it
done in the 6 weeks of work time remaining, I think at that
point the stars will surely align in the President's own
reelection effort, and the Congress and the new Members of
Congress with the President surely will have to have this
resolved on some level.
Anybody want to correct me on that?
Senator Smith. The next question is from Bobby Jindal. I am
sorry if I am mispronouncing your name.
I am fortunate I am not taking prescription drugs at this
time. I do receive chiropractic and acupuncture for back pain
which is not part of Medicare. But the Medicare claims process
is so complex that it can be months before a claim is paid.
That's just a fact. You know, we talk about the
complexities of going the private route versus the public
route. I mean, Medicare isn't exactly the most efficient system
that you've experienced in life, I suspect, and adding to its
complexity doesn't mean it's going to get more efficient and
better.
But again, it can work. It's just that government works
slowly. HMOs and private insurance can work. But then you've
got a gatekeeper in the private sector with a financial
incentive to say no. It can work, but it's frustrating to
seniors. Again, these are the tradeoffs we're wrestling with.
Is there any hope that Medicare claims can be simplified,
and can coverage be extended to cover acupuncture and other
alternative treatments?
I think, Bobby, you're the one to answer that. You
represent the Secretary of Health and Human Services.
Mr. Jindal. Sure. I would say two things about that. First,
in terms of simplifying the claims and speeding up payment,
there was a bipartisan bill that actually I think was
approved--if not unanimously, with one or two exceptions--out
of the House of Representatives that's intended to modernize
and streamline the Medicare program; to do things like
encourage electronic billing and electronic payment, speed up
the process. It has bipartisan support and that of the Finance
Committee, as well. So we do anticipate that reaching the
President's desk.
However, I think that the woman with the question, the
person who wrote that question, reaches a more profound point,
which is, the CEO of the Mayo Clinic, counted 130,000 pages of
rules and regulations in the Medicare program. He basically
testified that the Medicare commission in the Congress, that's
the fundamental challenge for providers and beneficiaries
staying in the program.
Senator Smith. How many pages?
Mr. Jindal. 130,000 pages.
Senator Smith. That's bigger than the Bible.
Mr. Jindal. Sir, I don't believe anybody in Washington has
130,000 pages of things to tell the Mayo Clinic on how to
practice medicine or provide health care. So there's a question
of, what is the best way to make the program more flexible and
responsible?
When you look at the history of the program, it has never
been particularly aggressive in adding benefits. Whether it's
been preventive services, immunizations, or other services,
it's really lagged behind the private sector.
One of the reasons the Administration was very encouraged
by that tripartisan approach--one of the things I should have
said, because Senator Breaux is chairman of this panel, you
know, and we encourage the work that he has done with Senator
Jeffords and other members of the Senate, including your
support is to encourage the use of private plans and private
options.
Historically, those private plans are much more nimble and
much more quick and responded much more quickly to these
seniors and adapted new preventive services. So probably the
best way for Medicare to add new benefits and be more
responsive in the marketplace is to give seniors more choices.
What we have seen does not work is to allow the Federal
Government to make those decisions. It is a very political
process and very slow process when that happens.
Senator Smith. I appreciate those comments. Hopefully we'll
get that to the President, and we can at least bring Medicare
billing up to today's technology and make it work.
Next is from Naomi Ballard. She writes, increasingly
physicians in Washington County are opting out of Medicare.
This limits access to Medicare. What plans are being made to
alter this trend?
Again, that goes back to Bobby.
Mr. Jindal. Sure. There's something called the sustainable
growth rate, one of these complicated formulas used by
Medicare, to reimburse physicians. Back in 1998, 1999,
everybody agrees there were some mistakes built into a formula
which resulted in last year almost a 5 percent decrease in
Medicare payments to doctors. This year there will be another
decrease and, until we fix it, it will continue to have
decreases.
Now, the Administration, we consistently think any new
spending should benefit the beneficiaries. We've been firm to
say, we want the first thing that Congress does is to have a
prescription drug benefit. We've also said of the providers, we
absolutely do think that the physicians do make a good case and
have presented convincing data.
We need to do something to help our physicians. I think
everybody agrees that we needed to do something to adjust the
formula to acknowledge that.
Senator Smith. Very good.
Jacqueline Stoble writes, most times patients are forced to
use generic drugs. Many times generics are not quite the same.
If you can't tolerate generics, will you be denied brand
medicines?
In all of the plans that I have seen, both are offered.
Generics come at a lower copay than the brand, which has a
higher copay. Instead of 2.50, it's like a $5.00 copay. So it's
not substantially more, but they are available.
Mr. Jindal. Senator, also remember, in the tripartisan and
other bills, it was also an option for medical appeals that if
you and your doctor certify that the patient has a clinical
reason for a drug, that there will be a way to cover that drug.
So you're absolutely right.
Senator Smith. This is a question for you, Bobby. You're on
the hot seat right now.
This is from Mary Ann Warhol. Mary Ann writes, many believe
that the universal health care, such as Hawaii's, which
includes a prescription drug benefit, is the best long-term
solution for Oregonians. Do you support this notion? Why or why
not?
Mr. Jindal. Two things. One, I work for a Secretary that
used to be the Governor of Wisconsin who, in turn, worked for
the President, who used to be the Governor of Texas. Both of
them are very eager to give their fellow Governors and their
States more flexibility for programs.
Almost 2 million people have additional benefit and
additional coverage. Almost 5 million people have gotten
additional benefits, simply by the Secretary saying, we want
the States to have the flexibility. They receive Federal
assistance. We want them to have flexibility. We don't want
them to be tied up in red tape.
The Secretary supports giving States more flexibility to be
the innovators, the ones blazing new paths to show how health
care can be more efficient. The second aspect of that question
deals with universal care. It is one of the challenges facing
our health care system. We have 38.7 million uninsured. That
number only dropped in the last 2 years and probably will
increase now, despite 10 years of rapid economic growth.
By having that many uninsured, you have individuals who are
not getting access to preventive care, but are going to the
emergency room. They are shifting costs to other individuals,
and so they're receiving the more expensive, least effective
type of care, and we do believe that's wrong.
That's why the President has proposed almost $80 billion in
refundable tax credits to allow the working poor to have
coverage. That's why he's made over $3 billion available in
expiring SCHIP dollars. That is why he's supporting doubling
the number of community health centers, as well as 40 million
additional dollars for health professionals to go in shortages
to pay their costs, their loans, their tuition, so they can go
serve the underserved population.
So the Administration strongly believes that the answer is
in allowing people to have the best access to high quality,
affordable insurance. Our message is consistent with our
message on Medicare. We want to help those who cannot afford
coverage. We don't want to displace coverage that exists, but
we also don't want to increase government bureaucracy.
Senator Smith. Sounds to me like a no on universal
coverage.
Mr. Jindal. The answer to universal coverage is to allow
States to have the flexibility so they can do----
Senator Smith. If they want to have it like Hawaii.
Mr. Jindal. That's right. The States should have the
flexibility to do that. The Federal Government, we don't
support the Federal Government nationalizing or socializing the
health care system. We do support everybody having access to
health care coverage, though.
Senator Smith. Absolutely.
This is for Dr. Kositch. Does the fact that Kaiser applies
evidence-based research in setting a prescription drug
formulary in practice help better assure patients and
physicians that they choose the right drug for the best price?
Should this approach be carried forth beyond an HMO model?
Good question from Jeffrey Cohen.
Dr. Kositch. It sounds like I wrote that question for
myself. The short answer is yes. I think it spoke to what I
said earlier, that if there is a rigorous, scientific approach
to encouraging effective use of medications that should be a
goal to provide as much coverage for many as people as possible
by trying to identify what works the best and what things are
priced at a market whim rather than any scientific basis.
Senator Smith. The answer to that will change with every
research fund.
Dr. Kositch. It does. But I think you can easily say on an
annual basis you could update such a list. While there are
people who would want it to be done sooner, an annual basis is
more than enough. As long as it's understood there is a process
that will go on year after year, and it wasn't a one-time
thing.
Senator Smith. Very good.
This is to you, as well, Doctor.
Oregon's innovative prescription drug research authorized
under some Senate bills this year provides consumer health care
providers with consumer reports like Gray to identify the right
drug at the right price, called evidence based research.
Oregon's process has been praised by PHRMA and AARP alike. How
can Congress support and promote expansion of this work?
Dr. Kositch. I am unfamiliar with this specific product,
although I am very aware that the state Medicaid program comes
to us asking for advice on how to screen prescriptions for
effectiveness, so I am assuming it's a related process.
Giving information to consumers is another way, as I said,
also giving the information to the FDA, of using scientific
knowledge in a way of allocating a resource.
Senator Smith. There are a couple other questions, but they
really do duplicate ones that have already been asked. So
before we adjourn, I would like to remind all of you that
caseworkers from my office and Senator Wyden's office are
present. Raise your hand if you're from my office and Senator
Wyden's office to help here.
These folks are here to answer your questions and tell you
about programs available in Oregon and help you deal with any
problems you may be having. There's also coffee and cookies
available in the back.
I truly hope that you have found this Oregon focus on the
prescription drug issue of value. I have, and I return to
Congress as committed as ever, but more determined to get a
result, the sooner the better, and I hope in the 107th
Congress. Because this is an issue, as I said in the beginning,
whose time has come, not for debate but for resolution.
Thank you all.
[Whereupon, at 12 p.m., the committee adjourned.]
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