[Congressional Record (Bound Edition), Volume 152 (2006), Part 9]
[Senate]
[Page 12514]
[From the U.S. Government Publishing Office, www.gpo.gov]




FAMILIES USA STUDY EXPOSES THE WEAKNESSES OF PRIVATE PRESCRIPTION DRUG 
                                 PLANS

                                 ______
                                 

                       HON. JANICE D. SCHAKOWSKY

                              of illinois

                    in the house of representatives

                        Thursday, June 22, 2006

  Ms. SCHAKOWSKY. Mr. Speaker, today I rise in order to bring to the 
attention of my colleagues a study released by Families USA on the new 
Plan D prescription drug plan, ``Big Dollars Little Sense: Rising 
Medicare Prescription Drug Prices,'' This report, which was released 
earlier this month, describes how private prescription drug plans have 
failed to secure cheaper drug prices for Medicare enrollees and have 
done nothing to stem the tide of rising drug prices.
  By comparing the prices under private Part D plans to the prices 
available to veterans through the Department of Veterans Affairs (VA) 
health system, the Families USA report shows that the private insurers 
are failing to provide needed cost savings to their customers. Between 
November 2005 and April 2006, private Part D insurers raised the prices 
on seventeen of the top twenty most frequently prescribed drugs to 
seniors significantly, while the same drugs under the VA plan 
experienced little or no increase at all. The median difference in 
price between the Part D and VA plans was 46 percent. In other words, 
seniors enrolled in Part D private plan are paying an average 46 
percent more for those drugs than they would have if they had been able 
to receive VA negotiated prices.
  As the study details:

       For each of the top 20 drugs prescribed to seniors, the 
     lowest price charged by any Part D plan was higher than the 
     lowest price secured by the VA . . . For Zocor (20 mg), a 
     drug used to prevent coronary heart disease, the lowest VA 
     price for a year's treatment was $127.44, while the lowest 
     Part D plan price was $1,275.36, a difference of $1,147.92 or 
     901 percent. For Zocor (40 mg), the lowest VA price for a 
     year's treatment was $190.76, while the lowest Part D plan 
     price was $1,275.36, a difference of $1,084.60 or 569 
     percent.

  This difference is staggering, and it shows the difference between a 
publicly-accountable plan that is committed to helping its 
beneficiaries and private plans that are committed to helping their 
profit margins, ``Big Dollars Little Sense,'' debunks the myth that the 
price difference between the VA and private Part D plans has to do with 
the number of drugs covered. As the study states, the VA plan covers 
just as many drugs as the plans in Part D but is able to obtain ``large 
discounts simply by using the government's negotiating power.'' The VA 
utilizes the significant leverage it has in order to get cheaper drugs 
for its beneficiaries--an authority Medicare is explicitly prohibited 
from using under the current Medicare law.
  Another discovery that the report made was that the private insurers 
have done almost nothing to protect seniors from rising drug prices. 
Over a six-month period between November 2005 to April 2006, drug 
prices for the top twenty drugs prescribed to seniors rose 3.8 percent. 
That increase was mirrored by the private drug plans, which raised 
their prices to their customers 3.7 percent. The plans were unable to 
moderate increases, unlike the VA, where prices either did not increase 
or increased at a far lesser rate. The drug prices continue to rise and 
the private insurers simply pass that increase on to the seniors 
enrolled in their plan, making little effort to negotiate fairer 
prices.
  The Families USA report not only draws attention to the 
ineffectiveness of the private insurers but highlights the fact that 
there is no way to hold them accountable. Part D states that these 
plans are required to pass the discounts they receive on to Medicare 
beneficiaries but does not specify the proportion of the discount that 
must be passed on. The insurers could actually be getting huge 
discounts from the drug manufacturers and just keeping the difference, 
but we have no way of knowing. There is no disclosure and no 
accountability for the private providers who supply an essential 
benefit to the elderly in this country. This is a serious problem for 
seniors. Prices are higher than necessary, can increase over the course 
of the year, and can vary among plans. It is also a serious problem for 
taxpayers, who pay 75 percent of the cost of Part D premiums. ``Big 
Dollars Little Sense,'' reports, too, that the median difference 
between the highest and lowest prices that Part D plans charged for the 
same drug was 36 percent. This is not just a question of picking the 
right plan during the enrollment period--since plans can change prices 
throughout the year but seniors are locked in, even a smart shopper can 
end up paying much more for their drugs than enrollees in other plans.
  This report concludes that seniors in this country would get a far 
better deal if they were able to benefit from Medicare price 
negotiation:

       Price data from the Part D plans from November 2005 and 
     April 2006 show that these plans are failing to deliver on 
     the promise that competition would bring prices down. The use 
     of ``market power,'' lauded by Medicare officials and the 
     Administration, has not resulted in drug prices that are 
     comparable to the low prices negotiated by the Department of 
     Veterans Affairs. Not only are Part D plan prices high, but 
     these prices are increasing far more often than they are 
     decreasing, and the plans are not containing drug price 
     inflation. These disturbing price trends do not bode well for 
     either Medicare consumers or taxpayers. The ``market power'' 
     of the plans has not delivered the low prices promised to 
     Medicare consumers.
       The law that established the Medicare prescription drug 
     benefit, in prohibiting Medicare from using the negotiating 
     clout of 43 million seniors and others in Medicare to obtain 
     low drug prices, has given seniors and taxpayers a benefit 
     that costs more than it should. When negotiations are divided 
     among a multitude of plans, none seems to do as well as a 
     single negotiator might. When it comes to reducing and 
     containing drug prices, the Medicare drug program is an 
     opportunity that has been badly squandered.

  A Medicare-administered plan with Medicare price negotiation would 
lower prices since the drug companies would be more likely to provide a 
good deal to an entity representing 43 million of their best customers. 
That is why I urge my colleagues to read this important report and to 
support H.R. 752, the Medicare Prescription Drug Savings and Choice 
Act, which would give seniors and persons with disabilities the ability 
to enroll in a Medicare-operated plan with lower prices.

                          ____________________