Medicare bill targets drug comparisons

Times Staff Writer

Prilosec or Nexium? Allegra or Claritin? Lipitor or Zocor? Americans are the world’s leading purchasers of prescription drugs, but most consumers have little idea of how well their pills measure up against other, possibly cheaper, medications.

A bill expected to go to the Senate floor this week would seek to begin changing that by having the government compare major kinds of medications and treatments provided to more than 43 million Medicare recipients to see how well they work.

The legislation faces an uphill battle because it would also lift the prohibition against the government negotiating lower drug prices for seniors in the Medicare prescription program -- a change that President Bush has threatened to veto.

Yet the little-noticed consumer information provisions of the Senate bill could transform the market behavior of millions of patients -- with potentially greater cost savings for seniors and taxpayers than merely granting bargaining power to Medicare bureaucrats.


“The stuff on comparative effectiveness is certainly important, and maybe even more important than negotiating authority,” said William Vaughan, a senior policy analyst with Consumers Union, publisher of Consumer Reports. “Ninety-nine percent of us respond the same way to different kinds of pills. When we know the facts, we will buy the stuff that works.”

The comparison studies are just one way in which the Senate bill differs from a version passed in the House as part of the Democratic majority’s initial agenda.

The Senate bill would also require Medicare to disclose to congressional agencies such pricing information as rebates and discounts obtained by private insurers participating in the prescription program. Academic researchers have complained that the data are now difficult, if not impossible, to access -- making it a challenge to assess how well the program is working for seniors.

Politically, perhaps the most important difference in the Senate bill is that it would not require Medicare to negotiate for lower prescription prices, but merely provide that option. That might entice enough votes from pro-business Republicans to send the measure to Bush.


Backers of the bill say the private drug plans can do a good job bargaining on most medications, but that the government may be able to obtain a lower price on a critically important new drug that has little competition from generics.

“It is clear that we need a better understanding of prescription drug pricing in the Medicare market,” said Sen. Max Baucus (D-Mont.), author of the legislation. “We also need to know more about the effectiveness of the drugs that Medicare pays for. [That] will make Medicare a smarter shopper and help us evaluate the success of the program.”

Some critics say comparison studies in the hands of government could be a step toward creating a restrictive list of covered drugs.

That could prevent patients from getting highly effective but costly new medications. The Senate and House bills would both prohibit the creation of a national formulary, or list. But such promises have not reassured the industry.

“Patient access to new life-saving medicines could be limited if restrictive policies such as price controls move forward in Congress,” said Ken Johnson, senior vice president of the Pharmaceutical Research and Manufacturers of America, the main industry trade group. “The Medicare prescription drug program is working well and has been a great success.”

But state governments and some consumer organizations have been experimenting with comparison studies. That approach was pioneered by researchers at Oregon Health & Science University, who pore through thousands of pages of clinical studies and technical articles to arrive at their recommendations.

Advocates say such analytical work provides a needed reality check against drug company marketing claims to both consumers and doctors. States use the researchers’ findings as a guide to pick the drugs they will cover in their Medicaid programs that serve the poor.

To distribute the results of the research to a wider range of consumers, Consumers Union has set up the website


Patients who are willing to do some comparison shopping, and perhaps experiment a little, can obtain substantial savings.

For example, over-the-counter Prilosec for heartburn costs $19 to $26 a month, compared with $193 for Nexium. Although some patients may need the higher-priced drug, the weight of evidence suggests many will do just as well with the cheaper medication, according to Consumers Union.

Although seniors are the main consumers of prescription drugs, some economists are skeptical that Medicare will ever be able to obtain rock-bottom prices for most medications.

“If you are half the market, you can’t believe that you are going to get below-average prices,” Fiona Scott Morton, an economics professor at Yale University, has told the Senate.

Moreover, giving the elderly a big break on prices could conceivably lead to higher costs for working families, since drug companies would seek to recoup discounts.

“What I hear is people wanting to have a high-quality plan at low-quality prices,” Morton said in an interview. “That’s impossible. There is no free lunch. High quality costs money.”