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People Struggle to Afford Their Drugs While Pharmaceutical Companies Rake in Billions
July 20, 2006 • Volume 6, Issue 29

Community organizations across the country are being flooded with cries for help from people who cannot afford to pay for their prescription drugs even though they are enrolled in a Medicare private drug plan (Part D). Many have fallen into the infamous doughnut hole, the gap in coverage during which people have to pay 100 percent of the cost of their drugs while continuing to pay premiums for drug coverage.

Robert M. Hayes, president of the Medicare Rights Center (MRC), testified at an Oversight Hearing held by the Senate Democratic Policy Committee on July 17, 2006, that the toll this coverage gap is taking on the most vulnerable men and women with Medicare is devastating. For callers to the MRC consumer hotlines, the abrupt end of prescription drug coverage is just what doctors and advocates across the country anticipated: a grave threat to the health and financial security of the frailest and sickest Americans.

Of course, many people are getting some benefit from this drug program. But the irony is that in too many cases once they hit the doughnut hole, people are worse off than they were 12 months ago. Many are forced to stop taking medication abruptly when they hit the doughnut hole. At times, especially with certain medical or psychiatric conditions, they would have been better off never starting a course of treatment.

Others are also worse off. Some have been shifted from retiree coverage to Part D: no prior prescription drug plan ever tossed enrollees into a coverage gap. Some states, like Florida, ended their assistance programs based on the claim that Part D would take care of their citizens. Other states have cut back.

Several studies, including one by researchers at Johns Hopkins University, have shown that if Medicare were allowed to negotiate for lower drug prices on behalf of its 43 million members, the savings could fill in the doughnut hole that is causing so much human suffering.

Why would Congress pass a law forbidding the government from using this bargaining power?

One clue can be found in a Public Citizen report that the drug industry hired 824 individual lobbyists in 2003—an all-time high in the year the law that created the Medicare drug benefit was passed. That amounts to more than one lobbyist for each member of the House and Senate.

The first sentence of a recent New York Times article on the subject provides another clue: “The pharmaceutical industry is beginning to reap a windfall from a surprisingly lucrative niche market: drugs for poor people” (“A Windfall from Shifts to Medicare,” Milt Freudenheim, July 18, 2006).

The Times goes one to explain that the “windfall, which by some estimates could be $2 billion or more this year, is a result of the transfer of millions of low-income people into the new Medicare Part D drug program that went into effect in January. Under that program, as it turns out, the prices paid by insurers, and eventually the taxpayer, for the medications given to those transferred are likely to be higher than what was paid under the federal-state Medicaid programs for the poor.”

So let us recap some of the consequences of the new privatized drug benefit to date:

How much more waste and suffering is this Congress willing to tolerate? Would a different Congress better serve the public interest, instead of the narrow interests of the drug industry?

We need a Medicare-administered drug benefit that will allow the government to leverage Medicare’s 43 million members to lower costs and fill in the doughnut hole.

Demand a Medicare Drug Benefit

This privatized drug benefit does not work. Demand a Medicare drug benefit that serves the interests of people with Medicare, not those of the pharmaceutical industry. Write your representatives today!

Medical Record

“If the Medicare drug bill did not preclude Medicare from directly negotiating with drug companies, Medicare could probably obtain prices similar to those in other industrialized countries…Drug prices are 34-59 percent lower in Canada, France, and the United Kingdom than they are in the United States. These countries provide a benchmark for the drug prices Medicare could achieve. This should be a feasible benchmark considering that other large purchasers, notably the Department of Veterans Affairs (VA), have come close to international prices. If Medicare could also meet this benchmark, then Congress could eliminate the doughnut hole in the Medicare drug benefit” (“MarketWatch: Doughnut Holes and Price Controls,” Gerard F. Anderson, Dennis G. Shea, Peter S. Hussey, Salomeh Keyhani, and Laurie Zephyrin, Health Affairs, July 21, 2004).

“If Medicare were allowed to negotiate directly with the drug industry, or to allow a single agent to negotiate on its behalf, it could purchase drugs at prices that are far lower than CBO [Congressional Budget Office] projected that private insurers would pay under the system put in place in the MMA [Medicare Modernization Act]. In addition, a single provider of prescription drug insurance would save tens of billions of dollars in administrative fees that result from having private insurers with marketing costs and profits. An efficient Medicare drug benefit could allow for substantial savings for both the federal and state governments, in addition to lower cost insurance for beneficiaries” (“The Savings from an Efficient Medicare Prescription Drug Plan,” Dean Baker, Center for Economic and Policy Research, January 2006).

“Part D plan prices are significantly higher than the prices available through the VA [Department of Veterans Affairs]: For each of the 20 drugs most frequently prescribed to seniors, the lowest price available through any Part D plan was higher than the lowest price negotiated by the VA” (“Big Dollars, Little Sense: Rising Medicare Prescription Drug Prices,” Families USA, June 2006).

“Tom Scully, chief administrator for the Centers for Medicare and Medicaid Services (CMS)—and Bush’s lead negotiator on the prescription drug bill—began negotiating with half a dozen potential employers while still haggling with Congress over the Medicare legislation. Scully eventually accepted jobs from both the lobbying firm Alston & Bird and the private equity investment firm Welsh, Carson, Anderson & Stowe. Since Scully came on board, Alston & Bird has signed up at least a dozen new health care clients, including Abbott Laboratories and Aventis Pharmaceuticals” (“The Medicare Drug War: An Army of Nearly 1,000 Lobbyists Pushes a Medicare Law that Puts Drug Company and HMO Profits Ahead of Patients and Taxpayers,” Public Citizen, June 2004).

“Mr. Frank Furfaro is a heart transplant patient who says simply and with dignity, ‘my bank account is wiped out.’ Mr. Furfaro takes two immunosuppressants. Before 2006, his Medicare HMO covered each of them for $29 a month. In January, he was led to believe by his Medicare HMO that nothing would change. Mr. Furfaro continued to pay $29 for each of his drugs. But at the end of March, his life changed: copayments for his medicines hit $661 and $339, respectively. He was trapped in the doughnut hole. He did not even know about the doughnut hole when he signed up with his HMO. He found out when he called the Medicare Rights Center for help. Since falling into the doughnut hole, Mr. Furfaro called the few charitable foundations that help people with copayments. He was told that there was no point to even leaving his name: the waiting list was already too long. Mr. Furfaro is alive today only because he has been hospitalized and received his immunosuppressants under Medicare Part A as an inpatient. This is bad medicine, bad economics and a morally unacceptable consequence of the drug benefit as it is now structured” (Testimony of MRC President Robert M. Hayes Before the Senate Democratic Policy Committee, July 17, 2006).

Special Note from MRC

We sadly report that Marty Berger, a charter member of the Medicare Rights Center's Consumer Action Board, died last month at age 76. Mr. Berger was also the president of the Pennsylvania Alliance for Retired Americans. "Marty was a lifelong champion of working people and in recent years became a passionate and wise leader in the fight for decent health care for all Americans,” said Robert Hayes, president of MRC. "We will miss him."

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Fast Relief: Part D Monitoring Project

The Medicare Rights Center (MRC) needs to hear about all the problems with the Medicare Part D benefit, whether they happen to you or someone in your community. With this information, we will be armed with the needed evidence to push for a Medicare-administered drug benefit.

Submit your story at www.medicarerights.org/partdstories.html

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The Louder Our Voice, the Stronger Our Message

Asclepios — named for the Greek and Roman god of medicine who, acclaimed for his healing abilities, was at one point the most worshipped god in Greece—is a weekly e-newsletter designed to keep you up-to-date with Medicare program and policy issues, and advance advocacy strategies to address them. Please help build awareness of key Medicare consumer issues by forwarding this action alert to your friends and encouraging them to subscribe today.

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