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10/24/07 Kanjorski Joins 14 Members in Introducing Bill to Create Government-Operated Drug Plan |
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FOR IMMEDIATE RELEASE
Oct. 24, 2007
Contact: Abigail McDonough
202-225-6511
KANJORSKI JOINS 14 MEMBERS IN INTRODUCING BILL
TO CREATE GOVERNMENT-OPERATED DRUG PLAN
Medicare Beneficiaries Could Have Saved Up to $180 in 2007
WASHINGTON - Congressman Kanjorski (D-PA) joined fourteen Members of Congress to introduce H.R. 3932, The Medicare Prescription Drug Savings and Choice Act of 2007. Currently, seniors pay high premiums and costs on their prescriptions because the drug programs operate directly through for-profit insurance companies which charge more administrative expenses than government-run programs. This bill provides more options for seniors through the Medicare Part D drug program by creating one or more government-operated drug plans to compete with private prescription drug plans. A recently released Congressional report showed that without the costly administrative expenses associated with private drug programs, Medicare beneficiaries could have saved up to $180 in 2007. Senior citizens and people with disabilities on Medicare would have the choice of enrolling in this government-run plan.
The Congressman fully supports the bill's provisions to create a fair system where Medicare recipients have additional options for their Part D program. The Medicare Prescription Drug Savings and Choice Act of 2007 would create a Medicare-run drug program that would improve the current Part D system by requiring the following actions:
- Requires the Secretary of Health and Human Services (HHS) to negotiate with drug companies on drug discounts, much as the Department of Veterans Affairs (VA) does for drugs used by veterans. Because the VA can negotiate prescription prices directly with drug companies, VA prices are 58% lower than Part D prices. For example, for Celebrex (200mg), an anti-inflammatory medicine, the lowest VA price for a year's prescription is $632.90, where as the lowest Part D plan price for the same drug is $946.44. Without a government-sponsored Part D plan, Celebrex costs 50% more for recipients of Medicare.*
- Requires the Secretary of HHS, to create a drug formulary promoting safety, value, and the appropriate use of drugs.
- Improves the appeals process in order to ensure that senior citizens and persons with disabilities in the government-operated plan receive the most appropriate drugs for them - based on medical judgment and their own medical condition.
- Requires the Secretary of HHS to develop a system to pay pharmacies that would include the prompt payment of claims
"The new bill rectifies many of the current problems with Medicare Part D by creating government-operated drug plans that function without providing insurance companies with the majority of the power," stated Congressman Kanjorski. "Medicare Part D was originally meant to decrease drug costs because officials expected insurance companies to negotiate for the best drug prices according to market competition. Instead, insurance companies spent excess amounts of money on advertising and other initiatives to attract the most consumers, resulting in higher drug prices. Yet, through this bill, the administrative costs would drop significantly and we could pass these savings on to Medicare recipients."
The bill comes after the publication of a Congressional report requested by Congressman Kanjorski identifying problems with Medicare Part D. The reports revealed that administrative expenses, marketing costs, and profits of the private insurers offering Medicare Part D coverage are almost six times higher than the administrative expenses of traditional Medicare, known as Parts A and B. Part D insurers reported administrative expenses of almost $5 billion in 2007, including $1 billion in profits alone.
The report states that the cost for private insurers to administer Medicare Part D equals 9.8% of total program expenditures. For the government-run programs, Medicare Parts A and B, administrative costs account for just 1.7% of total program overhead. Reducing these expenses to the level of traditional Medicare would have save taxpayers and beneficiaries $3.9 billion in 2007. Under Part D multiple insurance companies spend excess amounts of money on advertising and other initiatives to encourage more consumers to purchase their products.
The investigation by the staff of the House Oversight and Government Reform Committee is the first independent analysis to have access to proprietary data about drug plan costs and drug prices.
*A Report by Families USA, "No Bargain: Medicare Drug Plans Deliver High Prices", January 2007.
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