Senators Bill Nelson, Susan Collins introduce bill to reduce gap in Medicare prescription drug coverage

Media release

March 1, 2006

WASHINGTON, D.C. – Senators Bill Nelson (D-FL) and Susan Collins (R-ME) have introduced legislation that will enable more seniors to obtain their medications through the Medicare Part D prescription drug benefit. Currently, the benefit provides drug coverage to seniors who spend up to $2,251 for their medications and for those who spend over $5,100. The drug benefit does not provide any coverage to those seniors who spend between those amounts. The Senators’ legislation, the Medicare Prescription Drug Gap Reduction Act, would help provide lower cost medications for seniors who fall into this so-called "gap".

It is estimated that 7 million seniors will be hit by this huge gap in coverage. Sens. Nelson and Collins legislation would reduce the impact of this gap by allowing the Secretary of Health and Human Services to negotiate lower prices on behalf of seniors.

Under current law, Medicare is prohibited from using its purchasing power to negotiate lower prices for seniors. This is in contrast to other federal entities, such as the Veterans Administration and Department of Defense, which regularly secure prices significantly lower than those paid by seniors under Medicare’s drug program through negotiation.

And this type of negotiation is saving VA beneficiaries substantial amounts of money. An investigation by the Department of Health and Human Services in 2001 found that the VA paid 52% less than Medicare on average for hospital patients receiving medication from a list of 24 different prescription drugs. According to a report by a Washington, D.C. health and consumer advocacy group, the VA pays less than Medicare for 19 of the top 20 medications prescribed to seniors, and the median difference between prices was almost 50 percent.

Similar data was used by researchers at the Johns Hopkins Center for Hospital Finance and Management. Their study concludes that “. . . the gap in coverage could be completely eliminated if Medicare paid the same prices as the Veteran’s Administration and the Department of Defense . . .”

“Some seniors will continue struggling to pay for their medications with this huge gap in coverage, and that’s unacceptable,” Nelson says. “We can easily expand coverage if we allow Medicare to negotiate”.

"Under current law, seniors who are unfortunate enough to fall into the Medicare gap will be hard hit without more affordable medications. This legislation is a common sense approach to providing lower cost drugs to seniors who need them," Collins says.

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