Medicare Enhancements for Needed Drugs Act

MEDICARE ENHANCEMENTS FOR NEEDED DRUGS ACT -- (Senate - November 13, 2006)

Mr. WYDEN. Mr. President, a new public opinion poll shows that Americans are particularly concerned about the restriction that keeps Medicare from bargaining to hold down the costs of the medicine older people purchase.

In fact, a new poll yesterday indicated 93 percent of the American people want this restriction lifted--and for obvious reasons. The fact of the matter is, millions of older people simply cannot pay their skyrocketing prescription drug bills and they want to know why the Government isn't doing more to contain these costs.

Fortunately, we have been able to make a little bit of headway on this issue in the Senate. Senator Snowe and I, in particular, earlier this year, got the support of 54 Senators, a majority of the Senate, to lift this restriction and take stronger action to hold down the cost of medicine.

Medicare is sort of like the guy going to Costco buying toilet paper one roll at a time. The Government is not acting like a smart shopper. The Government is not taking practical steps like everyone in Tennessee, Oregon, Iowa, or anywhere else, to use bargaining power to hold down the cost of this essential for older people, prescription drugs.

We have made a bit of headway. I have been particularly pleased the distinguished Senator from Nevada, Mr. Reid, made it clear this would be a top priority for the Senate to take up when we begin our work early next year.

Given that and in hopes that the Senate can come together on a bipartisan basis--and I believe the approach Senator Snowe and I have been taking for the past 3 years can now get over 60 votes in the Senate--I take a few minutes tonight to outline a bit as to how it would work if this restriction was lifted and Medicare could genuinely act to hold down the cost of medicine.

So let's start with the example of a new drug coming out on the market for cancer, and it is an expensive drug. Let's say this drug that many seniors will need will cost $100,000. At present, each of the plans that offers the prescription drug benefit has to negotiate for the few people in each of those plans who might need the new drug.

If the legislation Senator Snowe and I have been advocating became law, the Secretary could negotiate on behalf of all the people in the Medicare private plans who need the drug. That way, there would be new leverage for older people in the private marketplace to hold down the cost of medicine. If you had a small number of people in a private plan, say, in Tennessee, and a small number of people in a private plan in Oregon, and a small number of people in a private plan in Iowa, the Secretary could negotiate on behalf of all of those people in Medicare's private plans. That could mean real savings to folks in Tennessee and folks in Oregon and folks elsewhere who right now do not have a lot of leverage in the private marketplace.

Now, think about the implications of this proposal. Nobody is talking about price controls. Nobody is talking about a one-size-fits-all run-from-Washington, DC, approach that would freeze innovation.

I know the distinguished Senator from Tennessee has been particularly interested, as I have, in taking approaches that promote innovation in the science and biomedical fields. What I have just described, which is something that could be done under the approach Senator Snowe and I have been advocating, will not freeze research, will not freeze innovation, but will make darn sure the senior citizens of this country and the taxpayers of this country have a new opportunity to hold down the cost of medicine and also protect the wallets of our taxpayers.

Let me give another example of how this approach can contain the costs of medicine. Let's say we have an older person in Portland, OR, or Miami or New York. They are in a metropolitan area, and in the metropolitan area they may have a choice of major plans because a lot of folks are vying to get a part of the ``big city'' market with a lot of older people. So let's say one of the seniors is in an HMO, a health maintenance organization, or they are in something called a PPO, a preferred provider organization, or maybe they are in a drug-only private plan. All of those private entities may be looking for ways to hold down the costs, but if one of those private plans does not get the same deal the other big private buyers get, then one of those plans can ask Medicare to step in at that point. In effect, one of those private plans that is not getting a fair shake in the marketplace can say to Medicare: Hey, look, we are not getting a very good deal when it comes to negotiating for our seniors. At that point, Medicare could step in and say: We are going to assist in that kind of bargaining process.

I happen to think just the fact Medicare is in a position to have that leverage--if the private marketplace is not willing to bargain seriously, is not willing to negotiate seriously--just the fact there would be that kind of leverage for Medicare can help to be a force to contain the cost of medicine for older people.

So here again I have cited an example of how you can hold down the cost of medicine without price controls, without national formularies and approaches that could constrain innovation, just by using plain old common sense and bargaining power, the way every business does in North Carolina, Tennessee, and across the country.

Now, finally, it seems to me we ought to be thinking about the fact that with many older people, they will have a private retirement package as well. So a lot of those seniors are concerned about their overall health care bill, knowing they are going to get some help from Medicare and some help from a private health package as well. But if you hold down the costs of the Medicare plan, then you are going to have more money in the pockets of older people as they try to cope with their extra out-of-pocket costs.

So when the Medicare plans save seniors money on medicine, that is simply less cost the retiree plan has to make up. Seniors are going to be looking at their overall bill, and they want to know that every step possible is being taken to hold down their Medicare expenses, as Senator Snowe and I have been advocating for the last 3 years, because if that is done, there is simply less cost for the retiree plan to make up.

Containing the costs on the Medicare side has the potential to help keep costs down for employers insuring their retirees. So if you do that, you are also going to provide some relief to the taxpayers of this country because included in the original Medicare bill are a lot of subsidies designed to help employers keep insuring their retirees so a lot of older people do not just get pushed back entirely into Medicare when their employers ought to be helping them. By containing drug costs through Medicare and containing some of the costs for those employers, then the need for taxpayer dollars to shore up those employer plans goes down.

What is the bottom line? We are going to be able to help seniors not through a Government cost-containment approach but by empowering those who are supposed to advocate for them in the private marketplace. That is what 54 Members of the U.S. Senate have voted for. It is a comprehensive, market-based, cost-containment approach. It will help older people in the marketplace if they are part of a small plan. And the Secretary is in a position to negotiate on behalf of all of those in those small plans, say, for an expensive cancer drug. It could help the older person in a big city where some plans are getting a good deal but one senior is not. At that point, the senior wants somebody to make sure there is some extra clout in the marketplace.

Finally, I think what Senator Snowe and I have been advocating over these last 3 years will help employers and taxpayers as well. If you hold down the costs on the Medicare side, that is going to mean the employers--the employers--of this country are not going to have to come up with as much money on their side to protect their retirees. Containing costs on the Medicare side clearly has the potential to keep costs down for employers insuring their retirees.

So now, as the Senate begins to schedule for early next year and Senators look at the variety of issues that are coming up, I hope they will look in particular at this concept which has won the support of 93 percent of the American people. I think most Americans just scratch their heads and say: How in the world could the Government say the only people in the United States--the only people in the United States--who will not bargain to hold down the costs of medicine are those running Medicare?

If you are in North Carolina and you are in the technology sector or you are in Oregon in the natural resources sector, the first thing you try to do is use your bargaining power and get the most for your dollar. You act as a smart shopper. And people have been flabbergasted that Medicare is the only ``person'' out there shopping without using every bit of clout that would be available to older people in the marketplace.

That is why this evening I wanted to take a few minutes to outline specifically how the changes Senator Snowe and I have been advocating for the last few years would work. They are common sense. They use the marketplace to protect the wallets of senior citizens and our taxpayers. I am particularly pleased Senator Reid has indicated this would be a high priority. Fifty-four Members of the U.S. Senate have already voted for it. I hope next year--as people begin to understand, with the examples I have given tonight and others, how this would work--my hope is early next year a significant step will be taken finally to hold down the costs of the medicines that are essential for this country's older population.

Mr. President, I yield the floor and suggest the absence of a quorum.

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