[Congressional Record Volume 145, Number 54 (Tuesday, April 20, 1999)]
[Senate]
[Pages S3931-S3937]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KENNEDY (for himself, Mr. Rockefeller, and Mr. Wellstone):
  S. 841. A bill to amend title XVIII of the Social Security Act to 
provide for coverage of outpatient prescription drugs under the 
Medicare Program; to the Committee on Finance.


            ACCESS TO Rx MEDICATIONS IN MEDICARE ACT OF 1999

  Mr. KENNEDY. Mr. President, today Senator Jay Rockefeller and I are 
introducing the Access to Rx Medications in Medicare Act. This 
legislation will add a long overdue benefit to Medicare--coverage of 
prescription drugs. Medicare is a promise to senior citizens. It says 
``Work hard, contribute to Medicare during your working years, and you 
will be guaranteed health security in your retirement years.'' But too 
often that promise is broken, because of Medicare's failure to protect 
the elderly against the high cost of prescription drugs.
  Our legislation will provide every senior citizen or disabled person 
with Medicare coverage for up to $1,700 worth of prescription drugs a 
year, and additional coverage for those with very high drug costs. 
Medicare will contract with the private sector organizations in regions 
across the country to administer and deliver the new coverage. 
Beneficiaries in traditional Medicare will select an organization to 
provide them with the benefit. Beneficiaries enrolled in 
Medicare+Choice organizations will receive coverage through their plan. 
Seniors who have equivalent or greater coverage through retiree health 
plans can continue that coverage or enroll in the new program. The bill 
will also required private Medigap plans to include supplemental 
coverage.
  Fourteen million beneficiaries have no prescription drug coverage. 
Millions more have coverage that is unaffordable, inadequate, or 
uncertain. The average senior citizen fills 18 prescriptions a year, 
and takes four to six prescription drugs daily. Many of them face 
monthly bills of $100, $200, or even more to fill their prescriptions. 
The lack of prescription drug coverage condemns many senior citizens to 
second-class medicine. Too often, they decide to go without the 
medication essential for effective health care, because they have to 
pay other bills for food or heat or shelter. These difficult choices 
will only worsen in the years ahead, since so many of the miracle cures 
of the future will be based on pharmaceutical products.

  This legislation is a lifeline for every senior citizen who needs 
prescription drugs to treat an illness or maintain their health. It 
assures that today's and tomorrow's senior citizens will be able to 
share in the medical miracles that we can expect in the new century of 
the life sciences. It addresses the greatest single gap in Medicare--
and the one that is the greatest anachronism in Medicare today.
  When Medicare was first enacted in 1965, its coverage was patterned 
after typical private insurance policies at the time--when only a 
minority of such policies covered prescription drugs. Today, 
prescription drug coverage is virtually universal in private plans, but 
Medicare is still caught in its 1965 time warp.
  This legislation has been carefully developed to respond to the 
legitimate concerns of the pharmaceutical and biotechnology industry. 
We have consulted with many leading firms on the development of this 
plan, and we believe that the industry will work with us to refine it 
and enact it. The most profitable industry in America has a strong 
interest in assuring that the miracle cures it creates are affordable 
for senior citizens.
  Prescription drug coverage under Medicare will not come cheaply, and 
I intend to work with my colleagues in Congress to find the fairest way 
to pay for this benefit. It may well be necessary to allocate a portion 
of the budget surplus to defray the cost. The hard work of American 
families has created the surplus. Assuring it should be as high a 
priority for the Congress as it is for the American people. We know 
that improper or inadequate use of prescription drugs now costs 
Medicare an estimated at least $20 billion annually in avoidable 
hospital and physician costs. Clearly, a well-constructed prescription 
drug benefit can achieve large savings by reducing these avoidable 
costs. The bottom line is that there are many possible ways to pay for 
this benefit. A consensus on the best financing will develop as 
Congress considers this issue.
  This legislation is literally a matter of life and death for millions 
of elderly and disabled citizens served by Medicare in communities 
throughout America. It is time for Congress to listen to their voices, 
and the voices of their children and grandchildren, too.
  I ask unanimous consent that the text of this legislation and 
accompanying materials be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                 S. 841

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Access to 
     Rx Medications in Medicare Act of 1999''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Medicare coverage of outpatient prescription drugs.
Sec. 3. Selection of entities to provide outpatient drug benefit.
Sec. 4. Optional coverage for certain beneficiaries.
Sec. 5. Medigap revisions.
Sec. 6. Improved medicaid assistance for low-income individuals.
Sec. 7. Waiver of additional portion of part B premium for certain 
              medicare beneficiaries having actuarially equivalent 
              coverage.
Sec. 8. Elimination of time limitation on medicare benefits for 
              immunosuppressive drugs.
Sec. 9. Expansion of membership of MEDPAC to 19.
Sec. 10. GAO study and report to Congress.
Sec. 11. Effective date.

     SEC. 2. MEDICARE COVERAGE OF OUTPATIENT PRESCRIPTION DRUGS.

       (a) Coverage.--Section 1861(s)(2) of the Social Security 
     Act (42 U.S.C. 1395x(s)(2)) is amended--
       (1) by striking ``and'' at the end of subparagraph (S);
       (2) by striking the period at the end of subparagraph (T) 
     and inserting ``; and''; and
       (3) by adding at the end the following:
       ``(U) covered outpatient drugs (as defined in subsection 
     (i)(1) of section 1849) pursuant to the procedures 
     established under such section;''.
       (b) Payment.--Section 1833(a)(1) of the Social Security Act 
     (42 U.S.C. 1395l(a)(1)) is amended--
       (1) by striking ``and (S)'' and inserting ``(S)''; and
       (2) by striking the semicolon at the end and inserting the 
     following: ``, and (T) with respect to covered outpatient 
     drugs (as defined in subsection (i)(1) of section 1849), the 
     amounts paid shall be the amounts established by the 
     Secretary pursuant to such section;''.

     SEC. 3. SELECTION OF ENTITIES TO PROVIDE OUTPATIENT DRUG 
                   BENEFIT.

       Part B of title XVIII of the Social Security Act (42 U.S.C. 
     1395j et seq.) is amended by adding at the end the following:

     ``SEC. 1849. SELECTION OF ENTITIES TO PROVIDE OUTPATIENT DRUG 
                   BENEFIT.

       ``(a) Establishment of Bidding Process.--
       ``(1) In general.--The Secretary shall establish procedures 
     under which the Secretary accepts bids from eligible entities 
     and awards contracts to such entities in order to provide 
     covered outpatient drugs to eligible beneficiaries in an 
     area. Such contracts may be awarded based on shared risk, 
     capitation, or performance.
       ``(2) Area.--
       ``(A) Regional basis.--The contract entered into between 
     the Secretary and an eligible entity shall require the 
     eligible entity to provide covered outpatient drugs on a 
     regional basis.
       ``(B) Determination.--In determining coverage areas under 
     this section, the Secretary shall take into account the 
     number of eligible beneficiaries in an area in order to 
     encourage participation by eligible entities.
       ``(3) Submission of bids.--Each eligible entity desiring to 
     provide covered outpatient drugs under this section shall 
     submit a bid

[[Page S3932]]

     to the Secretary at such time, in such manner, and 
     accompanied by such information as the Secretary may 
     reasonably require. Such bids shall include the amount the 
     eligible entity will charge enrollees under subsection (e)(2) 
     for covered outpatient drugs under the contract.
       ``(4) Access.--The Secretary shall ensure that--
       ``(A) an eligible entity complies with the access 
     requirements described in subsection (f)(5);
       ``(B) if an eligible entity employs formularies pursuant to 
     subsection (f)(6)(A), such entity complies with the 
     requirements of subsection (f)(6)(B); and
       ``(C) an eligible entity makes available to each 
     beneficiary covered under the contract the full scope of 
     benefits required under paragraph (5).
       ``(5) Scope of benefits.--The Secretary shall ensure that 
     all covered outpatient drugs that are reasonable and 
     necessary to prevent or slow the deterioration of, and 
     improve or maintain, the health of eligible beneficiaries are 
     offered under a contract entered into under this section.
       ``(6) Number of contracts.--The Secretary shall, consistent 
     with the requirements of this section and the goal of 
     containing medicare program costs, award at least 2 contracts 
     in an area, unless only 1 bidding entity meets the minimum 
     standards specified under this section and by the Secretary.
       ``(7) Duration of contracts.--Each contract under this 
     section shall be for a term of at least 2 years but not more 
     than 5 years, as determined by the Secretary.
       ``(8) Benchmark for contracts.--The Secretary shall not 
     enter into a contract with an eligible entity under this 
     section unless the Secretary determines that the average cost 
     (excluding any cost-sharing) for all covered outpatient drugs 
     provided to beneficiaries under the contract is comparable to 
     the average cost charged (exclusive of any cost-sharing) by 
     large private sector purchasers for such drugs.
       ``(b) Enrollment.--
       ``(1) In general.--The Secretary shall establish a process 
     through which an eligible beneficiary shall make an election 
     to enroll with any eligible entity that has been awarded a 
     contract under this section and serves the geographic area in 
     which the beneficiary resides. In establishing such process, 
     the Secretary shall use rules similar to the rules for 
     enrollment and disenrollment with a Medicare+Choice plan 
     under section 1851.
       ``(2) Requirement of enrollment.--Excluding an eligible 
     beneficiary enrolled in a group health plan described in 
     section 4 of the Access to Rx Medications in Medicare Act of 
     1999, an eligible beneficiary not enrolled in a 
     Medicare+Choice plan under part C must enroll with an 
     eligible entity under this section in order to be eligible to 
     receive covered outpatient drugs under this title.
       ``(3) Enrollment in absence of election by eligible 
     beneficiary.--In the case of an eligible beneficiary that 
     fails to make an election pursuant to paragraph (1), the 
     Secretary shall provide, pursuant to procedures developed by 
     the Secretary, for the enrollment of such beneficiary with an 
     eligible entity that has a contract under this section that 
     covers the area in which such beneficiary resides.
       ``(4) Areas not covered by contracts.--The Secretary shall 
     develop procedures for the provision of covered outpatient 
     drugs under this title to eligible beneficiaries that reside 
     in an area that is not covered by any contract under this 
     section.
       ``(5) Beneficiaries residing in different locations.--The 
     Secretary shall develop procedures to ensure that an eligible 
     beneficiary that resides in different regions in a year is 
     provided benefits under this section throughout the entire 
     year.
       ``(c) Providing Information to Beneficiaries.--The 
     Secretary shall provide for activities under this section to 
     broadly disseminate information to medicare beneficiaries on 
     the coverage provided under this section. Such activities 
     shall be similar to the activities performed by the Secretary 
     under section 1851(d).
       ``(d) Payments to Eligible Entities.--The Secretary shall 
     establish procedures for making payments to an eligible 
     entity under a contract.
       ``(e) Cost-Sharing.--
       ``(1) Deductible.--Benefits under this section shall not 
     begin until the eligible beneficiary has met a $200 
     deductible.
       ``(2) Copayment.--
       ``(A) In general.--Subject to subparagraph (B), the 
     eligible beneficiary shall be responsible for making payments 
     in an amount not greater than 20 percent of the cost (as 
     stated in the contract) of any covered outpatient drug that 
     is provided to the beneficiary. Pursuant to subsection 
     (a)(4)(B), an eligible entity may reduce the payment amount 
     that an eligible beneficiary is responsible for making to the 
     entity.
       ``(B) Basic benefit.--Subject to subparagraph (C), if the 
     aggregate amount of covered outpatient drugs provided to an 
     eligible beneficiary under this section for any calendar year 
     (based on the cost of covered outpatient drugs stated in the 
     contract) exceeds $1,700--
       ``(i) the beneficiary may continue to purchase covered 
     outpatient drugs under the contract based on the contract 
     price, but
       ``(ii) the copayment under subparagraph (A) shall be 100 
     percent.
       ``(C) Stop-loss protection.--The copayment amount under 
     subparagraph (A) shall be 0 percent once an eligible 
     beneficiary's out-of-pocket expenses for covered outpatient 
     drugs under this section reach $3,000.
       ``(D) Inflation adjustment.--
       ``(i) In general.--In the case of any calendar year 
     beginning after 2000, each of the dollar amounts in 
     subparagraphs (B) and (C) shall be increased by an amount 
     equal to--

       ``(I) such dollar amount, multiplied by
       ``(II) an adjustment, as determined by the Secretary, for 
     changes in the per capita cost of prescription drugs for 
     beneficiaries under this title.

       ``(ii) Rounding.--If any dollar amount after being 
     increased under clause (i) is not a multiple of $10, such 
     dollar amount shall be rounded to the nearest multiple of 
     $10.
       ``(f) Conditions for Awarding Contract.--The Secretary 
     shall not award a contract to an eligible entity under 
     subsection (a) unless the Secretary finds that the eligible 
     entity is in compliance with such terms and conditions as the 
     Secretary shall specify, including the following:
       ``(1) Quality and financial standards.--The eligible entity 
     meets quality and financial standards specified by the 
     Secretary.
       ``(2) Information.--The eligible entity provides the 
     Secretary with information that the Secretary determines is 
     necessary in order to carry out the bidding process under 
     this section, including data needed to implement subsection 
     (a)(8) and data regarding utilization, expenditures, and 
     costs.
       ``(3) Education.--The eligible entity establishes 
     educational programs that meet the criteria established by 
     the Secretary pursuant to subsection (g)(1).
       ``(4) Procedures to ensure proper utilization and to avoid 
     adverse drug reactions.--The eligible entity has in place 
     procedures to ensure the--
       ``(A) appropriate utilization by eligible beneficiaries of 
     the benefits to be provided under the contract; and
       ``(B) avoidance of adverse drug reactions among eligible 
     beneficiaries enrolled with the entity.
       ``(5) Access.--The eligible entity ensures that the covered 
     outpatient drugs are accessible and convenient to eligible 
     beneficiaries covered under the contract, including by 
     offering the services in the following manner:
       ``(A) Services during emergencies.--The offering of 
     services 24 hours a day and 7 days a week for emergencies.
       ``(B) Contracts with retail pharmacies.--The offering of 
     services--
       ``(i) at a sufficient (as determined by the Secretary) 
     number of retail pharmacies; and
       ``(ii) to the extent feasible, at retail pharmacies located 
     throughout the eligible entity's service area.
       ``(6) Rules relating to provision of benefits.--
       ``(A) Provision of benefits.--In providing benefits under a 
     contract under this section, an eligible entity may--
       ``(i) employ mechanisms to provide benefits economically, 
     including the use of--

       ``(I) formularies (pursuant to subparagraph (B));
       ``(II) alternative methods of distribution; and
       ``(III) generic drug substitution; and

       ``(ii) use incentives to encourage eligible beneficiaries 
     to select cost-effective drugs or less costly means of 
     receiving drugs.
       ``(B) Formularies.--If an eligible entity uses a formulary 
     to contain costs under this Act--
       ``(i) the eligible entity shall--

       ``(I) ensure participation of practicing physicians and 
     pharmacists in the development of the formulary;
       ``(II) include in the formulary at least 1 drug from each 
     therapeutic class;
       ``(III) provide for coverage of otherwise covered non-
     formulary drugs when recommended by prescribing providers; 
     and
       ``(IV) disclose to current and prospective beneficiaries 
     and to providers in the service area the nature of the 
     formulary restrictions, including information regarding the 
     drugs included in the formulary, copayment amounts, and any 
     difference in the cost-sharing for different types of drugs; 
     but

       ``(ii) nothing shall preclude an entity from--

       ``(I) requiring higher cost-sharing for drugs provided 
     under clause (i)(III), subject to limits established in 
     subsection (e)(2)(A), except that an entity shall provide for 
     coverage of a nonformulary drug on the same basis as a drug 
     within the formulary if such nonformulary drug is determined 
     by the prescribing provider to be medically indicated;
       ``(II) educating prescribing providers, pharmacists, and 
     beneficiaries about medical and cost benefits of formulary 
     products; and
       ``(III) requesting prescribing providers to consider a 
     formulary product prior to dispensing of a nonformulary drug, 
     as long as such request does not unduly delay the provision 
     of the drug.

       ``(7) Procedures to compensate pharmacists for 
     counseling.--The eligible entity shall compensate pharmacists 
     for providing the counseling described in subsection 
     (g)(2)(B).
       ``(8) Clinical outcomes.--
       ``(A) Requirement.--The eligible entity shall comply with 
     clinical quality standards as determined by the Secretary.
       ``(B) Development of standards.--The Secretary, in 
     consultation with appropriate medical specialty societies, 
     shall develop clinical quality standards that are applicable 
     to eligible entities. Such standards shall be based on 
     current standards of care.
       ``(9) Procedures regarding denials of care.--The eligible 
     entity has in place procedures to ensure--

[[Page S3933]]

       ``(A) the timely review and resolution of denials of care 
     and complaints (including those regarding the use of 
     formularies under paragraph (6)) by enrollees, or providers, 
     pharmacists, and other individuals acting on behalf of such 
     individual (with the individual's consent) in accordance with 
     requirements (as established by the Secretary) that are 
     comparable to such requirements for Medicare+Choice 
     organizations under part C; and
       ``(B) that beneficiaries are provided with information 
     regarding the appeals procedures under this section at the 
     time of enrollment.
       ``(g) Educational Requirements To Ensure Appropriate 
     Utilization.--
       ``(1) Establishment of program criteria.--The Secretary 
     shall establish a model for comprehensive educational 
     programs in order to assure the appropriate--
       ``(A) prescribing and dispensing of covered outpatient 
     drugs under this section; and
       ``(B) use of such drugs by eligible beneficiaries.
       ``(2) Elements of model.--The model established under 
     paragraph (1) shall include the following elements:
       ``(A) On-line prospective review available 24 hours a day 
     and 7 days a week in order to evaluate each prescription for 
     drug therapy problems due to duplication, interaction, or 
     incorrect dosage or duration of therapy.
       ``(B) Consistent with State law, guidelines for counseling 
     eligible beneficiaries enrolled under a contract under this 
     section regarding--
       ``(i) the proper use of prescribed covered outpatient 
     drugs; and
       ``(ii) interactions and contra-indications.
       ``(C) Methods to identify and educate providers, 
     pharmacists, and eligible beneficiaries regarding--
       ``(i) instances or patterns concerning the unnecessary or 
     inappropriate prescribing or dispensing of covered outpatient 
     drugs;
       ``(ii) instances or patterns of substandard care;
       ``(iii) potential adverse reactions to covered outpatient 
     drugs;
       ``(iv) inappropriate use of antibiotics;
       ``(v) appropriate use of generic products; and
       ``(vi) the importance of using covered outpatient drugs in 
     accordance with the instruction of prescribing providers.
       ``(h) Protection of Patient Confidentiality.--Insofar as an 
     eligible organization maintains individually identifiable 
     medical records or other health information regarding 
     enrollees under a contract entered into under this section, 
     the organization shall--
       ``(1) safeguard the privacy of any individually 
     identifiable enrollee information;
       ``(2) maintain such records and information in a manner 
     that is accurate and timely; and
       ``(3) assure timely access of such enrollees to such 
     records and information.
       ``(i) Definitions.--In this section:
       ``(1) Covered outpatient drug.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the term `covered outpatient drug' means any of the following 
     products:
       ``(i) A drug which may be dispensed only upon prescription, 
     and--

       ``(I) which is approved for safety and effectiveness as a 
     prescription drug under section 505 of the Federal Food, 
     Drug, and Cosmetic Act;
       ``(II)(aa) which was commercially used or sold in the 
     United States before the date of enactment of the Drug 
     Amendments of 1962 or which is identical, similar, or related 
     (within the meaning of section 310.6(b)(1) of title 21 of the 
     Code of Federal Regulations) to such a drug, and (bb) which 
     has not been the subject of a final determination by the 
     Secretary that it is a `new drug' (within the meaning of 
     section 201(p) of the Federal Food, Drug, and Cosmetic Act) 
     or an action brought by the Secretary under section 301, 
     302(a), or 304(a) of such Act to enforce section 502(f) or 
     505(a) of such Act; or
       ``(III)(aa) which is described in section 107(c)(3) of the 
     Drug Amendments of 1962 and for which the Secretary has 
     determined there is a compelling justification for its 
     medical need, or is identical, similar, or related (within 
     the meaning of section 310.6(b)(1) of title 21 of the Code of 
     Federal Regulations) to such a drug, and (bb) for which the 
     Secretary has not issued a notice of an opportunity for a 
     hearing under section 505(e) of the Federal Food, Drug, and 
     Cosmetic Act on a proposed order of the Secretary to withdraw 
     approval of an application for such drug under such section 
     because the Secretary has determined that the drug is less 
     than effective for all conditions of use prescribed, 
     recommended, or suggested in its labeling.

       ``(ii) A biological product which--

       ``(I) may only be dispensed upon prescription;
       ``(II) is licensed under section 351 of the Public Health 
     Service Act; and

       ``(III) is produced at an establishment licensed under such 
     section to produce such product.

       ``(iii) Insulin approved under appropriate Federal law.
       ``(iv) A prescribed drug or biological product that would 
     meet the requirements of clause (i) or (ii) but that is 
     available over-the-counter in addition to being available 
     upon prescription.
       ``(B) Exclusion.--The term `covered outpatient drug' does 
     not include any product--
       ``(i) except as provided in subparagraph (A)(iv), which may 
     be distributed to individuals without a prescription;
       ``(ii) when furnished as part of, or as incident to, a 
     diagnostic service or any other item or service for which 
     payment may be made under this title;
       ``(iii) that was covered under this title on the day before 
     the date of enactment of the Access to Rx Medications in 
     Medicare Act of 1999; or
       ``(iv) that is a therapeutically equivalent replacement for 
     a product described in clause (ii) or (iii), as determined by 
     the Secretary.
       ``(2) Eligible beneficiary.--The term `eligible 
     beneficiary' means an individual that is enrolled under part 
     B of this title.
       ``(3) Eligible entity.--The term `eligible entity' means 
     any entity that the Secretary determines to be appropriate, 
     including--
       ``(A) pharmaceutical benefit management companies;
       ``(B) wholesale and retail pharmacist delivery systems;
       ``(C) insurers;
       ``(D) other entities; or
       ``(E) any combination of the entities described in 
     subparagraphs (A) through (D).''.

     SEC. 4. OPTIONAL COVERAGE FOR CERTAIN BENEFICIARIES.

       (a) In General.--If drug coverage under a group health plan 
     that provides health insurance coverage for retirees is 
     equivalent to or greater than the coverage provided under 
     section 1849 of the Social Security Act (as added by section 
     3), beneficiaries receiving coverage through the group health 
     plan may continue to receive such coverage from the plan and 
     the Secretary may make payments to such plans, subject to the 
     requirements of this section.
       (b) Requirements.--To receive payment under this section, 
     group health plans shall--
       (1) comply with certain requirements of this Act and other 
     reasonable, necessary, and related requirements that are 
     needed to administer this section, as determined by the 
     Secretary;
       (2) to the extent that there is a contractual obligation to 
     provide drug coverage to retirees that is equal to or greater 
     than the drug coverage provided under this Act, reimburse or 
     otherwise arrange to compensate beneficiaries during the life 
     of the contract for the portion of the part B premium under 
     section 1839 of the Social Security Act that is identified by 
     the Secretary of Health and Human Services as attributable to 
     the drug coverage provided under section 1849 of that Act (as 
     added by section 3); or
       (3) for group health plans that are in existence prior to 
     enactment of this section and provide drug coverage to 
     retirees that is equal to or greater than the drug coverage 
     provided under section 1849 of the Social Security Act (as 
     added by section 3), reimburse or otherwise arrange to 
     compensate beneficiaries for the portion of the part B 
     premium under section 1839 of the Social Security Act that is 
     identified by the Secretary of Health and Human Services as 
     attributable to the drug coverage provided under section 1849 
     of that Act (as added by section 3) for at least 1 year from 
     the date that the group health plan begins participation 
     under this section.
       (c) Payments.--The Secretary shall establish a process to 
     provide payments to eligible group health plans under this 
     section on behalf of enrolled beneficiaries. Such payments 
     shall not exceed the amount that would otherwise be paid to a 
     private entity serving similar beneficiaries in the same 
     service area under section 1849 of the Social Security Act 
     (as added by section 3).

     SEC. 5. MEDIGAP REVISIONS.

       (a) Coverage of Outpatient Drugs.--Section 1882(p)(2)(B) of 
     the Social Security Act (42 U.S.C. 1395ss(p)(2)(B)) is 
     amended by inserting before ``and'' at the end the following: 
     ``including a requirement that an appropriate number of 
     policies provide coverage of drugs which compliments but does 
     not duplicate the drug benefits that beneficiaries are 
     otherwise entitled to under this title (with the Secretary 
     and the National Association of Insurance Commissioners 
     determining the appropriate level of drug benefits that each 
     benefit package must provide and ensuring that policies 
     providing such coverage remain affordable for 
     beneficiaries);''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on July 1, 2000.
       (c) Transition Provisions.--
       (1) In general.--If the Secretary of Health and Human 
     Services identifies a State as requiring a change to its 
     statutes or regulations to conform its regulatory program to 
     the amendments made by this section, the State regulatory 
     program shall not be considered to be out of compliance with 
     the requirements of section 1882 of the Social Security Act 
     due solely to failure to make such change until the date 
     specified in paragraph (4).
       (2) NAIC standards.--If, within 9 months after the date of 
     enactment of this Act, the National Association of Insurance 
     Commissioners (in this subsection referred to as the 
     ``NAIC'') modifies its NAIC Model Regulation relating to 
     section 1882 of the Social Security Act (referred to in such 
     section as the 1991 NAIC Model Regulation, as subsequently 
     modified) to conform to the amendments made by this section, 
     such revised regulation incorporating the modifications shall 
     be considered to be the applicable NAIC model regulation 
     (including the revised NAIC model regulation and the 1991 
     NAIC Model Regulation) for the purposes of such section.
       (3) Secretary standards.--If the NAIC does not make the 
     modifications described in

[[Page S3934]]

     paragraph (2) within the period specified in such paragraph, 
     the Secretary of Health and Human Services shall make the 
     modifications described in such paragraph and such revised 
     regulation incorporating the modifications shall be 
     considered to be the appropriate regulation for the purposes 
     of such section.
       (4) Date specified.--
       (A) In general.--Subject to subparagraph (B), the date 
     specified in this paragraph for a State is the earlier of--
       (i) the date the State changes its statutes or regulations 
     to conform its regulatory program to the changes made by this 
     section; or
       (ii) 1 year after the date the NAIC or the Secretary first 
     makes the modifications under paragraph (2) or (3), 
     respectively.
       (B) Additional legislative action required.--In the case of 
     a State which the Secretary identifies as--
       (i) requiring State legislation (other than legislation 
     appropriating funds) to conform its regulatory program to the 
     changes made in this section; but
       (ii) having a legislature which is not scheduled to meet in 
     2000 in a legislative session in which such legislation may 
     be considered;

     the date specified in this paragraph is the first day of the 
     first calendar quarter beginning after the close of the first 
     legislative session of the State legislature that begins on 
     or after July 1, 2000. For purposes of the previous sentence, 
     in the case of a State that has a 2-year legislative session, 
     each year of such session shall be deemed to be a separate 
     regular session of the State legislature.

     SEC. 6. IMPROVED MEDICAID ASSISTANCE FOR LOW-INCOME 
                   INDIVIDUALS.

       (a) Increase in SLMB Eligibility to 135 Percent of Poverty 
     Level.--.
       (1) In general.--Section 1902(a)(10)(E) of the Social 
     Security Act (42 U.S.C. 1396a(a)(10)(E)) is amended--
       (A) in clause (iii), by striking ``and 120 percent in 1995 
     and years thereafter'' and inserting ``, 120 percent in 1995 
     and through July 1, 2000, and 135 percent for subsequent 
     periods''; and
       (B) in clause (iv)--
       (i) by striking the dash and all that follows through 
     ``(II)'', and
       (ii) by striking ``who would be described in subclause (I) 
     if `135 percent' and `175 percent' were substituted for `120 
     percent' and `135 percent' respectively'' and inserting ``who 
     would be described in clause (iii) but for the fact that 
     their income exceeds 135 percent, but is less than 175 
     percent, of the official poverty line (referred to in such 
     clause) for a family of the size involved''.
       (2) Conforming amendment.--Section 1933(c)(2)(A) of such 
     Act (42 U.S.C. 1396v(c)(2)(A)) is amended by striking ``the 
     sum'' and all that follows and inserting ``the total number 
     of individuals described in section 1902(a)(10)(E)(iv) in the 
     State; to''.
       (b) Provision of Medicaid Prescription Drug Benefits for 
     QMBs and SLMBs as Wrap-Around Benefit.--
       (1) In general.--Section 1902(a)(10) of such Act (42 U.S.C. 
     1396a(a)(10)) is amended--
       (A) in subparagraph (E)(i), by inserting ``and for 
     prescribed drugs (in the same amount, duration, and scope as 
     for individuals described in subparagraph (A)(i))'' after 
     ``1905(p)(3))'';
       (B) in subparagraph (E)(iii), by inserting ``and for 
     prescribed drugs (in the same amount, duration, and scope as 
     for individuals described in subparagraph (A)(i))'' after 
     ``section 1905(p)(3)(A)(ii)''; and
       (C) in the clause (VIII) following subparagraph (F), by 
     inserting ``and to medical assistance for prescribed drugs 
     described in subparagraph (E)(i)'' after ``1905(p)(3))''.
       (2) Conforming amendment.--Section 1916(a) of such Act (42 
     U.S.C. 1396o(a)) is amended, in the matter before paragraph 
     (1), by striking ``(E)(i)'' and inserting ``(E)''.
       (c) Effective Dates.--
       (1) The amendments made by subsections (a)(1) and (b) take 
     effect on July 1, 2000, and apply to prescribed drugs 
     furnished on or after such date.
       (2) The amendment made by subsection (a)(2) applies to the 
     allocation for the portion of fiscal year 2000 that occurs on 
     or after July 1, 2000, and to the allocation for subsequent 
     fiscal years.
       (3) The amendments made by this section apply without 
     regard to whether or not regulations to implement such 
     amendments are promulgated by July 1, 2000.

     SEC. 7. WAIVER OF ADDITIONAL PORTION OF PART B PREMIUM FOR 
                   CERTAIN MEDICARE BENEFICIARIES HAVING 
                   ACTUARIALLY EQUIVALENT COVERAGE.

       (a) In General.--The Secretary of Health and Human Services 
     shall establish a method under which the portion of the part 
     B premium under section 1839 of the Social Security Act that 
     is identified by the Secretary of Health and Human Services 
     as attributable to the drug coverage provided under section 
     1849 of that Act (as added by section 3) is waived (and not 
     collected) for any individual enrolled under part B of title 
     XVIII of the Social Security Act who demonstrates that the 
     individual has drug coverage that is actuarially equivalent 
     to the coverage provided under that part.
       (b) Limitation.--Subsection (a) shall not apply to an 
     individual with coverage through a group health plan if the 
     group health plan receives payments for such individual 
     pursuant to section 4.

     SEC. 8. ELIMINATION OF TIME LIMITATION ON MEDICARE BENEFITS 
                   FOR IMMUNOSUPPRESSIVE DRUGS.

       (a) Revision.--
       (1) In general.--Section 1861(s)(2)(J) of the Social 
     Security Act (42 U.S.C. 1395x(s)(2)(J)) is amended by 
     striking ``, but only'' and all that follows up to the 
     semicolon at the end.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to drugs furnished on or after the date of 
     enactment of this Act.
       (b) Extension of Certain Secondary Payer Requirements.--
     Section 1862(b)(1)(C) of the Social Security Act (42 U.S.C. 
     1395y(b)(1)(C)) is amended by adding at the end the 
     following: ``With regard to immunosuppressive drugs furnished 
     on or after the date of enactment of the Access to Rx 
     Medications in Medicare Act of 1999, this subparagraph shall 
     be applied without regard to any time limitation.''.

     SEC. 9. EXPANSION OF MEMBERSHIP OF MEDPAC TO 19.

       (a) In General.--Section 1805(c) of the Social Security Act 
     (42 U.S.C. 1395b-6(c)), as amended by section 5202 of the Tax 
     and Trade Relief Extension Act of 1998 (contained in division 
     J of Public Law 105-277), is amended--
       (1) in paragraph (1), by striking ``17'' and inserting 
     ``19''; and
       (2) in paragraph (2)(B), by inserting ``experts in the area 
     of pharmacology and prescription drug benefit programs,'' 
     after ``other health professionals,''.
       (b) Initial Terms of Additional Members.--
       (1) In general.--For purposes of staggering the initial 
     terms of members of the Medicare Payment Advisory Commission 
     under section 1805(c)(3) of the Social Security Act (42 
     U.S.C. 1395b-6(c)(3)), the initial terms of the 2 additional 
     members of the Commission provided for by the amendment under 
     subsection (a)(1) are as follows:
       (A) One member shall be appointed for 1 year.
       (B) One member shall be appointed for 2 years.
       (2) Commencement of terms.--Such terms shall begin on 
     January 1, 2000.

     SEC. 10. GAO STUDY AND REPORT TO CONGRESS.

       (a) Study.--The Comptroller General of the United States 
     shall conduct a study and analysis of the implementation of 
     the competitive bidding process for covered outpatient drugs 
     under section 1849 of the Social Security Act (as added by 
     section 3), including an analysis of--
       (1) the reduction of hospital visits (or lengths of such 
     visits) by beneficiaries as a result of providing coverage of 
     covered outpatient drugs under such section;
       (2) prices paid by the medicare program relative to 
     comparable private and public sector programs; and
       (3) any other savings to the medicare program as a result 
     of--
       (A) such coverage; and
       (B) the education and counseling provisions of section 
     1849(g).
       (b) Report.--Not later than January 1, 2001, and annually 
     thereafter, the Comptroller General of the United States 
     shall submit a report to Congress on the study and analysis 
     conducted pursuant to subsection (a), and shall include in 
     the report such recommendations regarding the coverage of 
     covered outpatient drugs under the medicare program as the 
     Comptroller General determines to be appropriate.

     SEC. 11. EFFECTIVE DATE.

       Except as otherwise provided, the amendments made by this 
     Act apply to items and services furnished on or after July 1, 
     2000.
                                  ____


       Access to Rx Medications in Medicare Act of 1999--Summary


                                the need

       When Medicare was enacted in 1965, outpatient prescription 
     drug coverage was not a standard feature of private health 
     insurance policies. Now, virtually all employment-based 
     policies provide prescription drug coverage, but Medicare 
     does not.
       More than one-third of Medicare beneficiaries have no 
     coverage for outpatient prescription drugs. While other 
     elderly and disabled beneficiaries have some level of 
     outpatient prescription drug coverage through Medicare+Choice 
     plans, individually purchased Medigap or retiree health 
     coverage, too often that coverage is inadequate, expensive or 
     unreliable.


                          legislative proposal

       This legislation would create a new outpatient prescription 
     drug benefit under Part B. The benefit has two parts--a basic 
     benefit that will fully cover the drug needs of most 
     beneficiaries and a stop-loss benefit that will provide much 
     needed additional coverage to the beneficiaries who have the 
     highest drug costs.
       The proposal administers and delivers the benefit through 
     private entities and private sector performance benchmarks--
     rather than HCFA or federally designated price controls. All 
     beneficiaries would be covered by the new benefit. 
     Beneficiaries enrolled in Medicare+Choice plans would receive 
     the benefit through their plan. Beneficiaries in conventional 
     Medicare would enroll with an approved program in their area 
     of residence, following the general model of Medicare+Choice 
     enrollment.
       In addition, the proposal would preserve and improve 
     existing coverage in the private market that is equal to or 
     greater than the new coverage under Medicare. Beneficiaries 
     with equivalent coverage through a retiree health plan would 
     be able to keep that coverage and HHS would provide payment 
     to the plan equal to the payment that would otherwise be paid 
     on behalf of the beneficiary to one of the new private 
     entities.

[[Page S3935]]

                              The benefit

       Outpatient drugs covered under this Act are FDA-approved 
     therapies that are dispensed only by prescription, including 
     insulin and biologics, and that are reasonable and necessary 
     to prevent or slow the deterioration of, and improve or 
     maintain the health of covered individuals. This Act would 
     not cover over-the-counter products or therapies that are 
     currently covered under Medicare (e.g., those that are 
     administered ``incident to'' physician services).
       After beneficiaries meet a separate drug deductible of 
     $200, coverage is generally provided at levels similar to 
     regular Part B benefits--with the beneficiary paying not more 
     than 20 percent of the program's established price for a 
     particular product. The basic benefit would provide 
     coverage up to $1,700 annually. Medicare would provide 
     ``stop-loss'' coverage (i.e., Medicare would pay 100 
     percent) once annual out-of-pocket expenditures exceed 
     $3,000. Beneficiaries with drug costs in excess of the 
     basic benefit--but below the stop-loss trigger--would be 
     allowed to self-pay for additional medications at the 
     private entity's discounted price.
       This benefit package provides a new and much needed 
     guarantee of coverage for all beneficiaries, and will fully 
     cover the prescription drug needs of approximately 80 percent 
     of beneficiaries.

         Use of private sector and support of existing coverage

       Coverage would be provided through private entities under 
     contract with HHS. Eligible entities include pharmaceutical 
     benefit management companies, insurers, networks of wholesale 
     and retail pharmacies, and other appropriate organizations. 
     Eligible entities would submit competitive bids to the 
     Secretary for regional coverage--regions would be determined 
     by the Secretary and structured in such a way as to encourage 
     participation by and competition among private entities. 
     Service areas would consist of at least one state whenever 
     possible.
       Bids would be awarded based on shared risk, capitation or 
     performance to entities that meet the requirements of the Act 
     and provide for discounts comparable to those garnered by 
     other large private sector purchasers. There is no fee 
     schedule or rebate structure. The Secretary shall award at 
     least two bids in an area, if such bids meet the requirements 
     of the Act, encourage competition and improve service for 
     beneficiaries.
       Entities may employ a variety of cost-containment 
     techniques used in the private sector (e.g., formularies, 
     differential cost-sharing for certain products, etc.), 
     subject to guidelines and beneficiary protections established 
     in the Act. Entities must contract with a sufficient number 
     and distribution of retail pharmacies throughout the plan's 
     service area to assure convenient access for covered 
     beneficiaries.

           Additional assistance for low-income beneficiaries

       Beneficiaries with incomes between the level for Medicaid 
     eligibility and 135 percent of poverty would receive 
     comprehensive wrap-around coverage through Medicaid, 
     including assistance with cost-sharing and premiums.

         Incentive to maintain current private market coverage

       To maintain coverage in the retiree health market, 
     employers who offer retiree drug coverage that is equal to or 
     better than the new Medicare benefit would be eligible for a 
     payment equal to the payment that would otherwise be made to 
     the local private entity. This would help beneficiaries with 
     comprehensive drug coverage in retiree health plans to keep 
     their current coverage.

               Measures to decrease drug-related problems

       Improper use of or lack of access to prescription drugs is 
     estimated to cost Medicare more than $20 billion annually 
     (primarily through avoidable hospitalizations and admissions 
     to skilled nursing facilities.) Participating private 
     entities must use systems to assure appropriate prescribing, 
     dispensing and use of covered therapies. These programs must 
     include on-line prospective review and methods to identify 
     and educate pharmacists, providers and beneficiaries on (1) 
     instances or patterns of unnecessary or inappropriate 
     prescribing or dispensing or substandard care, (2) potential 
     adverse reactions, (3) inappropriate use of antibiotics, (4) 
     appropriate use of generic products, and (5) patient 
     compliance.

                            Medigap reforms

       The Secretary and the National Association of Insurance 
     Commissioners would be required to revise the standard 
     Medigap packages to reflect the new Medicare benefit, and 
     provide for coverage that compliments, but does not 
     duplicate, such coverage in an appropriate number of standard 
     packages.


                      estimated cost and financing

       The Congressional Budget Office has not yet estimated the 
     costs or potential savings associated with this proposal. The 
     proposal does not specify the financing mechanism, but viable 
     options include (1) recovering--through legislation or 
     litigation--the Medicare costs attributable to treating 
     tobacco-related diseases and conditions, (2) an increase in 
     the federal tobacco tax, (3) a small portion of the 
     unallocated surplus, or (4) savings achieved as part of the 
     financing of more comprehensive Medicare reform legislation.
                                  ____


      Access to Rx Medications in Medicare Act of 1999 Fact Sheet

       The greatest gap in Medicare coverage in the lack of a 
     prescription drug benefit. The time has come to modernize 
     Medicare's benefits by including coverage for outpatient 
     prescription drugs.


                                Coverage

       When Medicare was enacted in 1965, outpatient prescription 
     drug coverage was not a standard feature of private insurance 
     policies. Today, however, virtually all employment-based 
     policies provide prescription drug coverage.\1\
---------------------------------------------------------------------------
     Footnotes at end of article.
---------------------------------------------------------------------------
       Approximately one-third of Medicare beneficiaries have no 
     prescription drug coverage. Coverage among the remaining 
     beneficiaries is often inadequate, unaffordable and 
     uncertain. Approximately 12 percent receive limited coverage 
     through individually purchased Medigap policies, which are 
     extremely expensive and often difficult to obtain. About six 
     percent of Medicare beneficiaries have limited drug coverage 
     through Medicare HMOs, but many plans are cutting back or 
     eliminating drug coverage. Only about one-third of 
     beneficiaries have reasonably comprehensive coverage, through 
     an employment-based retirement plan or through Medicaid--and 
     the proportion with employment-based coverage is 
     declining.\2\


                        spending and utilization

       Purchase of prescription drugs accounts for the largest 
     single source of out-of-pocket health costs for Medicare 
     beneficiaries.\3\
       About 85 percent of the elderly use at least one 
     prescription medicine during the year. The average senior 
     citizen takes more than four prescription drugs daily and 
     fills an average of eighteen prescriptions a year. It is not 
     uncommon for seniors to face prescription drug bills of at 
     least $100 a month.\4\
       The elderly, who make up 12 percent of the population, are 
     estimated to use one-third of all prescription drugs.\5\
       Lack of Medicare coverage disproportionately increases the 
     financial burden on women, rural residents, low-income 
     beneficiaries and older beneficiaries.\6\
       A 1993 study, before the most recent surge in drug costs, 
     reported that one in eight senior citizens said they were 
     forced to choose between buying food and buying medicine.\7\
       Medicare beneficiaries without supplemental private 
     coverage for prescription drugs spend twice as much on 
     prescription drugs as their counterparts with private 
     insurance.\8\
       Increasingly, the miracle cures of the future will depend 
     on pharmaceuticals developed through new breakthroughs in 
     biology and biotechnology. These cures will generally save 
     money overall, but the individual products will be expensive. 
     The dollar volume of drug sales last year increased 16.6%, 
     but most of the increase was due to greater use of costly new 
     drugs, rather than price increases.\9\
       Medicare beneficiaries pay exorbitant prices for the drugs 
     they buy, because they generally do not have access to 
     discount programs available to other buyers. A study of five 
     commonly prescribed drugs found that Medicare beneficiaries 
     paid twice as much as the drug companies' favored 
     customers.\10\
       Elderly persons without drug coverage are among the last 
     purchasers who pay full price. According to a recent Standard 
     and Poor's report on the pharmaceutical industry, 
     ``[d]rugmakers have historically raised prices to private 
     customers to compensate for the discounts they grant to 
     managed care consumers.'' Because Medicare beneficiaries are 
     among the only private patients without additional coverage, 
     they shoulder most of the burden generated by the industry's 
     preference for cost-shifting.\11\


    adequate coverage and improved utilization are wise investments

       Assuring Medicare beneficiaries access to drugs in a well-
     managed program can produce immense savings for the Medicare 
     program. Savings arise because seniors are able to afford to 
     take the drugs that have been prescribed for their condition 
     and because it is easier to encourage compliance with drug 
     regimens and avoid complications or interactions because of 
     inappropriate use. Improper use of prescription drug costs 
     Medicare more than $20 billion annually, primarily through 
     avoidable hospitalizations and admissions to skilled nursing 
     facilities.\12\
       One study found that hospitals costs for a preventable 
     adverse drug event run nearly $5,000 per episode.\13\
       GAO reported in June 1996 that Medicaid's automated drug 
     utilization review system reduced adverse drug events and 
     saved more than $30 million a year in just five states.


                        research and development

       The Pharmaceutical industry spent more than $21 billion in 
     research and development in 1998.\14\ Ensuring access for the 
     elderly through this proposal will provide a natural market 
     for new and innovative therapies, promoting additional 
     investments in research and development.


                               footnotes

     \1\ Department of Labor, Employee Benefits in Small Private 
     Establishments.
     \2\ The Lewin Group, ``Current Knowledge of Third Party 
     Outpatient Drug Coverage for Medicare Beneficiaries,'' 
     November 9, 1998, cited in staff documents, Medicare 
     Commission; Margaret Davis, et al., ``Prescription Drug 
     Coverage, Utilization, and Spending Among Medicare 
     Beneficiaries,'' Health Affairs, January-February, 1999.
     \3\ AARP, ``Out-of-Pocket Spending.''
     \4\ Stephen H. Long, ``Prescription Drugs and the Elderly: 
     Issues and Options,'' Health Affairs, Spring 1994.

[[Page S3936]]

     \5\ AARP Public Policy Institute, ``Overview: Lack of 
     Coverage Burdens Many Medicare Beneficiaries,'' September 
     1998.
     \6\ Jeanette Rogowski, PhD, et al, ``The Financial Burden of 
     Prescription Drug use Among Elderly Persons,'' The 
     Gerontologist 37:4 (August 1997).
     \7\ American Pharmacy, October, 1992; HCFA Office of 
     Strategic Planning, Data from the Current Beneficiary Survey, 
     cited in staff documents, Medicare Commission; Department of 
     Health and Human Services, unpublished data; Committee on 
     Government Reform and Oversight, U.S. House of 
     Representatives, Minority Staff Report, ``Prescription Drug 
     Pricing in the United States: Drug Companies Profit at the 
     Expense of Older Americans,'' October 20, 1998.
     \8\ Rogowski, The Gerontologist 37:4 (August 1997).
     \9\ Elyse Tanoye, Wall Street Journal, November 16, 1998.
     \10\ Committee on Government Reform and Oversight, 
     ``Prescription Drug Pricing.''
     \11\ Ibid.
     \12\ Prescription Drugs and the Elderly: Many Still Receive 
     Potentially Harmful Drugs Despite Recent Improvements (GAO/
     HEHS-95-152, July 24, 1995); 60 FR 44182 (August 24, 1995).
     \13\ David W. Bates, Md, MSc, et al., ``The Costs of Adverse 
     Drug Events in Hospitalized Patients,'' JAMA, January 22/29, 
     1997.
     \14\ Pharmaceutical Research and Manufacturers of America, 
     ``The Value of Pharmaceuticals,'' 1998.
                                  ____



                                benefit

       New benefit under Part B.
       20% coinsurance; special $200 deductible. Special 
     assistance for low-income beneficiaries (i.e., income <135% 
     of poverty).
       Basic coverage of first $1,700 worth of expenditures 
     annually, including cost-sharing.
       Stop-loss coverage once annual out-of-pocket spending 
     reaches $3,000.


                       administration of benefit

       All benefits provided through private sector:
       Secretary enters into contracts with at least two private 
     entities (pharmacy benefit management organizations, 
     insurance companies, consortiums of retail pharmacists, etc.) 
     in each region to provide benefits. Beneficiaries choose 
     which one to sign up with.
       Medicare HMOs provide benefit directly. Medicare+Choice 
     payments adjusted to reflect additional cost of drug 
     coverage.
       Private businesses offering coverage equal to or greater 
     than Medicare benefit as part of retiree health program are 
     eligible for payments to maintain coverage.
       Beneficiaries who have and maintain equivalent private 
     sector coverage may opt-out of program entirely.
       All programs must provide convenient access to drugs 
     through retail pharmacies.
       Programs must include measures to assure proper use of 
     prescription drugs and reduce adverse drug reactions or other 
     drug-related problems.
       Programs must allow patients to receive most appropriate 
     drug.
       Standard Medigap packages are redesigned by the Secretary 
     of HHS and NAIC to reflect new Medicare benefit, and provide 
     complimentary coverage, where appropriate.


                     cost of program and financing

       Cost estimates not yet available. Beneficiaries pay 25% of 
     cost through Part B premium (with assistance for low-income). 
     Additional financing possibilities include: higher tobacco 
     taxes, recoupment of federal costs for tobacco-related 
     diseases, unallocated portion of surplus, savings from long-
     term Medicare reform proposal (in reconciliation or alone), 
     and savings from reduced hospitalizations and other costs 
     related to inappropriate use of prescription drugs.

  Mr. ROCKEFELLER. Mr. President, I am pleased to be introducing the 
``Access to Rx Medications in Medicare Act of 1999'' with my colleague 
from Massachusetts, Senator Kennedy. Our legislation seeks to assist 
Medicare beneficiaries with their single largest out-of-pocket expense 
for health care services--prescription drugs.
  I would like to thank Senator Kennedy for his leadership in bringing 
this issue to the forefront of the health care debate. I have long 
admired Senator Kennedy's commitment and dedication to improving the 
lives of our most vulnerable citizens.
  This is not the first time prescription coverage has been discussed 
seriously in the United States Senate. The debate around providing 
prescription drug coverage was first discussed while the creation of 
the Medicare program was being considered. Unfortunately, in the end, 
drug coverage was not included.
  Medicare has not been updated substantially since its enactment and 
we know that a lot has changed in health care since 1965. The program 
was modeled after employer-sponsored health plans--most of which, at 
the time, did not offer prescription drug coverage. Now, almost all 
employer-sponsored health plans recognize the important role that 
prescription drugs play in modern medicine. Additionally, the value of 
drug therapy was unclear in 1965. Today, medical and technological 
advances in drug safety and effectiveness have created more 
pharmaceutical products that can treat disease and manage chronic 
illnesses.
  A decade ago, the Senate sought to redress that error and provide 
prescription drug coverage to all--but politics overwhelmed a much-
needed policy change and the benefit was forfeited. I believe it is 
time to reenergize the debate.
  Today, we have the opportunity to build on successful private sector 
initiatives to provide Medicare beneficiaries with much needed 
prescription drug coverage. Pharmaceutical benefit managers (PBMs) have 
the information infrastructure, claims experience, and detailed 
understanding of drug management to provide a strong, stable benefit 
structure. By taking advantage of their management skills, we can 
update the Medicare program, make it stronger, make it more 
competitive, and more able to meet the challenges presented by the 
approaching retirement of the baby boom generation.
  Mr. President, I am constantly in touch with West Virginians who 
describe the dilemmas they face about paying for the prescription 
drugs. These are people who have worked hard all their lives, raised 
families, contributed to their communities, and paid their taxes. Now, 
in the twilight of their lives, a time that they should be enjoying 
with their children and grandchildren, they are struggling to make ends 
meet. And health care expenses, especially prescription drug costs, are 
breaking their budgets.
  A West Virginia senior has an average income of $10,700 and spends 
$2,600 annually on average in out-of-pocket health care expenses. 
Prilosec, a popular anti-ulcer drug, costs about $1000 a year. Lipitor, 
a drug that controls cholesterol levels, and Rezulin, an anti-diabetic 
drug, each cost over $800 a year. But the rent, electricity, phone, and 
groceries also have to be paid. And there is only so much that can be 
cut when a person is down to choosing between basic necessities.
  Mr. President, I'd like to share some examples of West Virginians who 
would truly apppreciate the enactment of the ``Access to Rx Medications 
in Medicare Act.'' I know of an elderly woman in West Virginia who 
relies solely on Social Security for her monthly income of $800 but 
spends over $100 a month for her heart medication. I know of another 
elderly widow in West Virginia who has monthly income of $760 but 
spends $500 a month in prescription drug costs. She constantly worries 
about her future, especially if her health takes a turn for the worse.
  West Virginians are not alone. Between one-third and one-half of all 
Medicare beneficiaries--that's roughly between 13 and 19 million 
seniors--have little or no prescription drug coverage.

  The seniors who are the most vulnerable are the lowest income 
beneficiaries and those suffering from chronic illnesses. Eighty 
percent of the elderly suffer from one or more chronic diseases, many 
of which could be controlled by drug therapy. The chronically ill spend 
$400 more annually on average than seniors without a chronic illness. 
Seniors in West Virginia are disproportionately hurt by chronic 
illness. Heart disease, cancer, strokes are the leading causes of death 
in my state.
  Low-income seniors are especially at risk for developing chronic 
illnesses. Unfortunately, low-income seniors are also not likely to 
have prescription drug coverage--only 36% of those with incomes less 
than $10,000 had drug coverage--but they spend a greater percentage of 
their income to pay for prescription drugs than do higher-income 
beneficiaries.
  Those who do have access to prescription drug coverage rely on 
patchwork of public and private measures that usually offer very 
limited coverage with high premiums, coinsurance rates, and 
deductibles--making the lifesaving coverage they need hard to maintain. 
The most comprehensive coverage sources of prescription drug coverage 
are Medicaid and employer-sponsored retiree insurance. However, recent 
trends indicate that fewer firms are offering retiree benefits that 
include drug coverage because of the cost.
  Seniors who do not have prescription drug coverage and have to buy 
medication on their own are the hardest hit by the steep increases in 
prescription drug costs. A recent Congressional study found that 
seniors may pay as much as double what HMOs, insurance companies and 
other bulk purchasers pay. The price difference is due to the fact that 
bulk purchasers can negotiate much lower prices for their drug orders

[[Page S3937]]

than the retail pharmacies--where seniors buy their drugs--can. Even 
though 34 million seniors participate in the Medicare program, Medicare 
beneficiaries have no leverage when purchasing medication.
  Mr President, the ``Access to Rx Medications in Medicare Act" helps 
seniors in several ways. First, it would provide seniors without 
existing coverage a basic drug benefit, up to about $1700 dollars a 
year, under Medicare Part B. Once the benefit has been exhausted, 
seniors can continue to purchase prescription drugs at the program's 
discounted price. Next, this bill offers stop-loss protection that is 
triggered when a beneficiary spends more than $3,000 annually in out-
of-pocket prescription drug costs. Finally, this legislation would 
improve the protections offered by current law to assist the lowest 
income beneficiaries and those with the highest out-of-pocket drug 
costs.
  The ``Access to Rx Medications in Medicare Act'' builds on 
infrastructure already in place in the private sector. Pharmaceutical 
benefits managers, networks of retail or community pharmacies, or 
insurers will have the opportunity to submit competitive bids to manage 
the benefit. The PBMs would then negotiate discounts and rebates for 
Medicare beneficiaries just like they do for HMOs and insurance 
companies in return for a payment from Medicare.
  Finally, providing prescription drug coverage to seniors is cost-
effective in the long-run. Drug therapy, especially in managing chronic 
illnesses, saves money by keeping seniors out of hospitals and nursing 
homes. This proposal would also save money by reducing improper use of 
prescription drugs, which currently costs Medicare $16 billion 
annually.
  Mr. President, when Congress created the Medicare program nearly 35 
years ago, we made a commitment to provide affordable, quality health 
care for our seniors. Today, prescription drugs are an essential 
component of quality health care. The lack of affordable prescription 
drug coverage in the Medicare program is especially saddening at a time 
when most Americans are experiencing greater prosperity than ever 
before.
  I believe that we have to honor the commitment we made to those who 
came before us and sacrificed so much to make this nation what it is 
today. Providing Medicare coverage for outpatient prescription drugs is 
necessary to update and modernize the Medicare benefit package. Now is 
the time to enact legislation and so I urge my colleagues to support 
the ``Access to Rx Medications in Medicare Act of 1999.''
                                 ______