[Congressional Record Volume 152, Number 90 (Wednesday, July 12, 2006)]
[Senate]
[Pages S7424-S7426]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BINGAMAN (for himself, Mr. Lautenberg, Mr. Menendez, Mr. 
        Dorgan, Mr. Kennedy, Ms. Stabenow, Mr. Dayton, Mr. Johnson, 
        Mrs. Clinton, and Mr. Akaka):
  S. 3650. A bill to include costs incurred by the Indian Health 
Service, a Federally qualified health center, an AIDS drug assistance 
program, certain hospitals, or a pharmaceutical manufacturer patient 
assistance program in providing prescription drugs toward the annual 
out of pocket threshold under part D of title XVIII of the Social 
Security Act and to provide a safe harbor for assistance provided under 
a pharmaceutical manufacturer patient assistance program; to the 
Committee on Finance.
  Mr. BINGAMAN. Mr. President, I rise today to introduce legislation 
with Senators Lautenberg, Menendez, Dorgan, Kennedy, Stabenow, Dayton, 
Johnson, Clinton, and Akaka entitled the ``Helping to Fill the Medicare 
Rx Gap Act of 2006.'' This legislation and companion legislation to be 
introduced by Congressman Dingell fixes an important problem for 
Medicare beneficiaries and safety net providers by allowing costs 
incurred by AIDS Drug Assistance Programs, ADAPs, the Indian Health 
Service, IHS, federally qualified health centers, certain safety net 
hospitals, and pharmaceutical manufacturer-sponsored Patient Assistance 
Programs, PAPs--entities that provide prescription drugs or drug 
assistance for populations under their care--to count toward a 
beneficiary's annual out-of-pocket threshold as established under the 
Medicare Modernization Act, MMA.
  With the Medicare drug benefit now in effect for more than six 
months, approximately 3.4 million seniors are reaching the point at 
which coverage is eliminated until they reach the catastrophic limit. 
Under the MMA, Medicare pays 75 percent of drug costs until a 
beneficiary's expenses reach $2,250 in a year. Then it stops paying 
until costs exceed $5,100, leaving a so-called ``doughnut hole'' of 
$2,850 that seniors are expected to manage on their own. According to 
the Kaiser Family Foundation, about 6.9 million Medicare beneficiaries 
will have to deal with a gap in their drug coverage at some point this 
year.
  An important part of the MMA's prescription drug benefit requires the 
tracking of beneficiaries' ``true out-of-pocket'' costs, TrOOP, to 
determine the point at which a beneficiary becomes eligible for 
catastrophic coverage. In an additional effort to constrain the cost of 
the prescription drug benefit, the MMA limited the types of 
expenditures that could count toward a beneficiary's TrOOP, including 
only:
  Cost-sharing related to the annual deductible; costs borne by the 
Part D enrollee (or contributions by friends or family members on the 
beneficiary's behalf); contributions from qualifying State Pharmacy 
Assistance Programs, SPAPs; contributions from eligible charitable 
organizations; and waivers or reductions by commercial pharmacies of 
cost-sharing requirements of Medicare prescription drug plans.
  Under current law, costs incurred by AIDS Drug Assistance Programs, 
Indian Health Service, IHS, pharmacies, community health centers, and 
certain safety net hospital pharmacies on behalf of Part D enrollees 
during their coverage gap--i.e. while the enrollee is in the so-called 
``doughnut hole''--are not permitted to count for TrOOP purposes. In 
turn, many individuals with HIV/AIDS, Native Americans, and other low-
income individuals receiving assistance through community health 
centers or other qualified safety net hospital pharmacies are never 
able to reach the catastrophic limit--the point at which Medicare would 
pay 95 percent of the beneficiary's drug costs. As a result, these 
beneficiaries are forced to pay premiums to their Medicare drug plan 
and to absorb the monthly drug costs for a benefit they are not able to 
access.
  A study that was recently published in the New England Journal of 
Medicine found that prescription drug plans that include doughnut hole-
like coverage gaps may lower beneficiary drug costs but any savings are 
offset by increases in the costs of hospitalizations and emergency room 
use. Specifically, the study found that patients with such capped 
benefits had higher rates of nonelective hospitalizations, visits to 
the emergency department, and even death. It certainly is not 
surprising that the coverage gap will result in many Americans going 
without needed medications but it is important to note that overall 
medical costs are not reduced and that providers will be 
disproportionately affected when the doughnut hole is reached.
  And just when charity pharmaceutical assistance programs are needed 
most, the current policy is making it difficult for pharmaceutical 
companies to continue to provide free pharmaceuticals to our nation's 
poor elderly. The HHS OIG has issued guidance that prohibits costs 
incurred on behalf of Part D beneficiaries by pharmaceutical 
manufacturer-sponsored Pharmaceutical Assistance Programs, PAPs--
programs run by the pharmaceutical industry that provide free or low-
cost drugs to eligible poor and low-income individuals to count toward 
a patient's TrOOP due to concerns that providing drugs through these 
programs might violate the federal anti-kickback statute. The anti-
kickback statute prohibits offering or receiving payment to increase 
the use of products or services--in this case, to steer prescription 
drug use--at the cost of Federal health care programs. In turn, several 
pharmaceutical manufacturers are considering terminating their PAPs to 
avoid running afoul of the law. According to a January article in the 
Washington Post, 37 pharmaceutical companies donated 22 million 
prescriptions worth $4.1 billion through PAPs. Across the Nation 
seniors who benefit from these programs are fearful that they will be 
forced to go off needed medications or to go into bankruptcy if these 
programs are not available to help them.

[[Page S7425]]

  While HHS is working with the pharmaceutical industry to develop 
guidelines that would allow PAPs to continue to operate in compliance 
with current law, the HHS OIG maintains that PAP costs will not be 
permitted to count toward a patient's TrOOP in any circumstance. As a 
result, similar to the ADAPs, IHS pharmacies, community health centers 
and safety net hospital pharmacies, PAPs that provide prescription 
drugs for patients during the coverage gap are forced to become the 
``payer of last resort'' because the costs they incur are not permitted 
to count toward TrOOP expenses and thus, the patient is unable to reach 
the catastrophic limit.
  Pharmacy Assistance Programs, AIDS Drug Assistance Programs, 
community health centers, and safety net hospital pharmacies will 
maintain their commitment to provide assistance to low-income senior 
citizens and people with disabilities in the coverage gap but the 
current policy imposes a significant financial burden on our nation's 
health care safety net. While we all recognize the importance of 
controlling costs, this policy stands to harm vulnerable beneficiaries 
and safety net providers by permitting the Medicare program to shift 
the cost burden on to a variety of other federal programs, including 
discretionary safety net programs, and PAPs. It does not make sense 
that the Federal Government pays private drug plans a capitated rate to 
provide services and beneficiaries pay monthly premiums to Medicare 
while ADAPs, IHS pharmacies, community health centers and certain 
safety net hospital pharmacies and pharmaceutical manufacturer PAPs are 
left to shoulder the cost of providing prescription medications to 
their population of enrollees who will never reach the catastrophic 
limit. Just as current policy allows SPAP spending to count toward the 
catastrophic limit so should the costs incurred by these entities.
  In addition, this legislation would correct the inequity in the 
current policy which unfairly discriminates between beneficiaries who 
receive their prescription drugs from commercial pharmacies and those 
who receive their medications through PAPs or from safety net 
pharmacies run by the IHS, community health centers, and certain public 
hospitals. Currently, only commercial pharmacies' waivers or reductions 
in Medicare Part D cost-sharing requirements are allowed to count 
towards TrOOP. This legislation would prevent lower-income Medicare 
beneficiaries from getting trapped in the doughnut hole by leveling the 
playing field so that beneficiaries who get their drugs through PAPs or 
pharmacies run by the IHS, community health centers, or public 
hospitals pharmacies can move just as quickly toward the catastrophic 
coverage benefit.
  Mr. President, I urge your support for this important legislation to 
allow Part D-related costs incurred by ADAPs, IHS, federally qualified 
health centers, and certain safety net hospitals as well as 
pharmaceutical manufacturer PAPs to count toward a beneficiary's TrOOP 
expenses. This bill would ensure that all Part D enrollees are 
permitted appropriate access to the catastrophic coverage that was 
promised under the MMA.
  Mr. President, I commend to my colleagues the New England Journal of 
Medicine study entitled ``Unintended Consequences of Caps on Medicare 
Drug Benefits,'' and I ask unanimous consent that the Washington Post 
article and the text of the bill to be printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3650

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Helping Fill the Medicare Rx 
     Gap Act of 2006''.

     SEC. 2. INCLUDING COSTS INCURRED BY THE INDIAN HEALTH 
                   SERVICE, A FEDERALLY QUALIFIED HEALTH CENTER, 
                   AN AIDS DRUG ASSISTANCE PROGRAM, CERTAIN 
                   HOSPITALS, OR A PHARMACEUTICAL MANUFACTURER 
                   PATIENT ASSISTANCE PROGRAM IN PROVIDING 
                   PRESCRIPTION DRUGS TOWARD THE ANNUAL OUT OF 
                   POCKET THRESHOLD UNDER PART D.

       (a) In General.--Section 1860D-2(b)(4)(C) of the Social 
     Security Act (42 U.S.C. 1395w-102(b)(4)(C)) is amended--
       (1) in clause (i), by striking ``and'' at the end;
       (2) in clause (ii)--
       (A) by striking ``such costs shall be treated as incurred 
     only if'' and inserting ``subject to clause (iii), such costs 
     shall be treated as incurred if''
       (B) by striking ``, under section 1860D-14, or under a 
     State Pharmaceutical Assistance Program''; and
       (C) by striking the period at the end and inserting ``; 
     and''; and
       (3) by inserting after clause (ii) the following new 
     clause:
       ``(iii) such costs shall be treated as incurred and shall 
     not be considered to be reimbursed under clause (ii) if such 
     costs are borne or paid--

       ``(I) under section 1860D-14;
       ``(II) under a State Pharmaceutical Assistance Program;
       ``(III) by the Indian Health Service, an Indian tribe or 
     tribal organization, or an urban Indian organization (as 
     defined in section 4 of the Indian Health Care Improvement 
     Act);
       ``(IV) by a Federally qualified health center (as defined 
     in section 1861(aa)(4));
       ``(V) under an AIDS Drug Assistance Program under part B of 
     title XXVI of the Public Health Service Act;
       ``(VI) by a subsection (d) hospital (as defined in section 
     1886(d)(1)(B)) that meets the requirements of clauses (i) and 
     (ii) of section 340B(a)(4)(L) of the Public Health Service 
     Act; or
       ``(VII) by a pharmaceutical manufacturer patient assistance 
     program, either directly or through the distribution or 
     donation of covered part D drugs, which shall be valued at 
     the negotiated price of such covered part D drug under the 
     enrollee's prescription drug plan or MA-PD plan as of the 
     date that the drug was distributed or donated.''.

       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to costs incurred on or after January 1, 2006.

     SEC. 3. PROVIDING A SAFE HARBOR FOR PHARMACEUTICAL 
                   MANUFACTURER PATIENT ASSISTANCE PROGRAMS.

       (a) Safe Harbor.--Section 1128B(b)(3) of the Social 
     Security Act (42 U.S.C. 1320a-7b(b)(3)) is amended--
       (1) in subparagraph (G), by striking ``and'' at the end;
       (2) in subparagraph (H), as added by section 237(d) of the 
     Medicare Prescription Drug, Improvement, and Modernization 
     Act of 2003 (Public Law 108-173; 117 Stat. 2213)--
       (A) by moving such subparagraph 2 ems to the left; and
       (B) by striking the period at the end and inserting a 
     semicolon;
       (3) by redesignating subparagraph (H), as added by section 
     431(a) of the Medicare Prescription Drug, Improvement, and 
     Modernization Act of 2003 (Public Law 108-173; 117 Stat. 
     2287), as subparagraph (I);
       (4) in subparagraph (I), as so redesignated--
       (A) by moving such subparagraph 2 ems to the left; and
       (B) by striking the period at the end and inserting ``; 
     and''; and
       (5) by adding at the end the following new subparagraph:
       ``(J) any remuneration paid by a pharmaceutical 
     manufacturer patient assistance program, either in cash or 
     through the distribution or donation of covered Part D drugs 
     (as defined in section 1860D-2(e)), to an individual enrolled 
     in a prescription drug plan under part D of title XVIII or in 
     an MA-PD plan under part C of such title.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to remuneration paid on or after January 1, 2006.
                                  ____

       There being no objection, the materials were ordered to be 
     printed in the Record, as follows:

                       The High Cost of Drug Caps


          benefit limits mean more hospital visits, study says

       June 6, 2006.--People with limited prescription drug 
     coverage skip their medicines, make more trips to the 
     hospital and die sooner than patients with unlimited 
     benefits, a New England Journal of Medicine study found.
       The study compared the medical records of 157,275 people in 
     a plan that covered only the first $1,000 worth of drugs with 
     those of 41,904 people who had unlimited drug coverage.
       Those with limited drug coverage spent 31 percent less on 
     drugs, but their total medical costs were not significantly 
     lower, as they had a 9 percent greater chance of going to the 
     emergency room and a 13 percent greater chance of landing in 
     the hospital.
       ``The savings in drug costs from the cap were offset by 
     increases in the costs of hospitalization and emergency 
     department care,'' concluded the researchers, who were led by 
     John Hsu of Kaiser Permanente in Oakland, Calif.
       The annual death rate of people whose drug benefits were 
     capped was 22 percent higher than those with unlimited 
     benefits.
       ``These changes affect the sickest patients the most, since 
     they reach their caps on benefits earlier in the year than 
     other patients,'' said Kenneth Thorpe, of Emory University in 
     Atlanta, in a Journal editorial.
       The study is especially relevant to the new Medicare Part D 
     drug plans: Many of them have significant gaps in coverage, 
     or ``doughnut holes,'' where enrollees must pay in full for 
     annual drug costs between $2,250 and $5,100.
       ``In short, caps on drug benefits, such as those used in 
     Medicare, for a population of patients with chronic illnesses 
     result in worse outcomes and do not reduce spending 
     considerably,'' said Thorpe.

[[Page S7426]]

       The study showed that while 26 percent of people with 
     diabetes skipped at least 20 percent of their doses if their 
     drug benefits were capped, the rate was 21 percent for those 
     who dIdn't have a cap.
       All patients in the study had a required co-payment of $15 
     to $30 for brand-name drugs, and $10 for generic medicines.

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