Parties vie for high ground on drug benefit

The cost of prescription drugs is fast becoming one of the hottest issues in public life – from the chambers of Congress to courtrooms across the nation.

Despite rising federal deficits, the House and Senate are gearing up for votes on drug-benefit bills that could add anywhere from $350 billion to more than $800 billion to the federal budget over the next 10 years.

Meanwhile, some 35 state attorneys general are discussing strategies to take drug companies to court to force reductions in "fraudulent" pricing. Some say that the potential windfall to state treasuries could rival the tobacco settlements of the 1990s.

It's a sign that a concern this intense, especially among the nation's seniors, can't be sidelined, even at a time of war and deficits.

In facts, as efforts in Congress heat up this week, "It's beginning to look like a spending war," says Nick Calio, assistant to the president for legislative affairs.

The nation's drug bill last year topped $147 billion. Seniors wind up picking up most of that tab because of a hole in the nation's Medicare system, which was set up before drugs became such an important part of medical treatment.

"It's a shortcoming that was always there, but it did not matter so much when drugs were not so expensive," says Henry Aaron, senior fellow in economic studies at the Brookings Institution. "But it matters a great deal now."

The price of the 50 most commonly prescribed drugs for seniors rose, on average, nearly three times the rate of inflation last year, according to a report released this week by Families USA, a consumer lobby group.

Drug companies say the numbers do not account for the discounts many seniors get, but the upward trend remains steep.

Most members of Congress ran on this issue in their last campaigns. Many even used the same slogan: No senior should have to choose between food and prescription drugs. And no one is eager to face voters this fall without at least an effort to meet that promise.

The plans shaping up on Capitol Hill represent sharply different views on how to meet the need. Republicans propose a voluntary drug benefit, including subsidies to insurance companies, to provide drug coverage to seniors. Democrats want to put a government-managed drug benefit in the Medicare system.

The plans also vary widely in coverage and overall cost. House Republicans propose premiums that offer seniors coverage for 80 percent of drug costs up to the first $1,000; then half of the next $2,000 and all out-of-pocket costs above $3,800. The bill also includes some $30 billion for Medicare providers to encourage them to stay in the system.

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