Senior Drug Plan Needed

In his proposed 1994 Health Security Act, President Clinton called for adding a prescription drug benefit to Medicare. The huge plan failed famously, but with drug prices soaring 15% a year, well ahead of inflation, the idea of Medicare covering not only inpatient care but essential drugs outside the hospital has been steadily gaining popularity.

A powerful force against a prescription drug benefit has been pharmaceutical companies, which fear it would allow the government to push down prices, undercutting the high profits they say they need to continue research. The manufacturers insisted they would support a drug benefit only if it was part of a comprehensive government overhaul of Medicare. That was a savvy stalling tactic, for Congress has long been unable to reach even basic agreement on how to begin overhauling the program.

Last week, however, officials of the industry’s trade group, Pharmaceutical Research and Manufacturers of America, announced they were dropping their opposition. Acknowledging that they were tired of criticism by politicians and the press, industry executives said they will support a federal drug benefit this year even without comprehensive Medicare reform.

Now comes the hard work of figuring out how to structure the benefit.

Democrats plan bills that would dedicate up to $45 billion of the budget surplus to a maximum prescription drug benefit of $1,000 a year through 2008. It would be available to anyone on Medicare, with a co-payment. Republicans have proposed limiting benefits to those seniors at or near the federal poverty level.

Given the squeeze that rising drug prices are putting on the middle class as well as the poor, Congress should extend a basic drug benefit package to all, even if that means using a sliding scale of premiums or co-payments to keep the cost to government down. Costs would be affected by drug prices as well. Drug companies give substantial bulk discounts to private insurers; Medicare should do at least as well, despite company protests.

Other sorts of price discrepancies also need addressing. For example, American Home Products charges $108.90 for one month’s supply of the arthritis drug Lodine when it is prescribed for humans but only $37.80 when the same drug is prescribed for dogs.

The legislation that created Medicare was written in the early 1960s with the goal of helping senior citizens meet their basic health care needs. Back then that generally meant surgery or hospitalization. Since then, ailments of aging have become increasingly treatable through outpatient drugs.

Currently, Medicare pays $2,065 per patient to administer an injection drug called Calcijex to kidney dialysis patients but declines to pay $438 a year for a pill version. Given the cost savings of outpatient drugs, a well-designed Medicare drug benefit might even help pay for itself while fulfilling Medicare’s original vision.