Durbin Says Medicare RX Drug Benefit Must be Improved in 110th Congress

DURBIN SAYS MEDICARE RX DRUG BENEFIT MUST BE IMPROVED IN 110TH CONGRESS

U.S. Senator Dick Durbin (D-IL) today met with local Medicare beneficiaries enrolled in Part D who have fallen into the "doughnut hole" and called on Congress to support his legislation to close the coverage gap, while lowering the price of prescription drugs for seniors. Durbin was also joined by U.S. Representative Jan Schakowsky, who has authored similar legislation in the House of Representatives.

Beneficiaries whose annual drug costs are between $2,250 and $5,100 fall into their plan's "doughnut hole" and are forced to pay the full price for their medications.

A study released by Families USA last month found that this $2,850 gap will grow to $3,051 next year and increase to $5,066 by 2013. Of the 2,182 plans nationally, only 55 offer meaningful donut hole coverage. Next year, the number of private plans increases to 2,844, but the total number of plans offering donut hole coverage decreases to 38. Also, seniors in Illinois who have access to a plan that offers doughnut hole coverage will likely see their monthly premiums increase by 77% next year.

"For months, many seniors have been paying the full price for a drug plan designed by and for the pharmaceutical industry," Durbin said. "More than 430,000 Illinoisans have been at risk of falling into the doughnut hole. Until we change the law to give Medicare the authority to negotiate on behalf of its beneficiaries, the current drug plan will continue to be a financial boon to pharmaceutical companies and a bad deal for seniors."

Durbin noted that there are 130 different private plans in Illinois and said that seniors are being shortchanged because Medicare was prohibited in the 2003 law from using its buying power to negotiate for lower drug prices.

"There is power in numbers," Durbin said. According to a recent Congressional report, allowing Medicare to negotiate directly with drug companies could reduce prices by 25% or more. This means that 8.7 million Medicare beneficiaries nationwide who fully pay their own premiums and co-payments could expect an average saving of almost $500 annually if drug prices were negotiated.

Durbin introduced the Medicare Prescription Drugs Savings Act to reverse a provision in the Medicare prescription drug bill which prohibits the Secretary of Health and Human Services from negotiating with drug companies for lower prices. The bill instructs the Secretary of Health and Human Services to offer a nationwide Medicare-delivered prescription drug benefit and to negotiate group purchasing agreements on behalf of beneficiaries who choose to receive their drugs through the Medicare-administered benefit. Savings obtained from direct negotiations with drug companies would be used to close the coverage gap.

Durbin pointed to the federal government's action five years ago when our nation was living under a threat of Anthrax attacks. The Bush Administration, under the direction of former Health and Human Services Secretary Tommy Thompson, used its bargaining power to negotiate directly with Bayer to drive down the price of Cipro from $4 a pill to 95 cents a pill.

A study released earlier this year by the Institute for America's Future concluded that the combined savings from having Medicare negotiate prices directly with the pharmaceutical industry and from having Medicare directly offer a prescription drug benefit rather than rely on private insurers would be more than $600 billion over the next seven years. "Giving Medicare the right to negotiate on behalf of seniors is old-fashioned free market economics: if one buys in bulk, the price will come down," Durbin said.

"Until we change the law to allow Medicare to offer drug coverage directly and to give it the authority to negotiate on behalf of its beneficiaries much like the Veterans Administration does, the current drug plan will continue to be a financial boon to pharmaceutical companies and a mixed bag for seniors," Durbin said.

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