Medicare's new drug program

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I covered the inception of Medicare on July 1, 1966. Originally, the law contained no provision for out-of- hospital drugs, in those days, a minor expense. Since then, thanks to inflation and costly new drugs, medications have become a major expense.

A study by The New England Journal of Medicine, published as the new program went into effect on Jan. 1, warned that 42 million Medicare beneficiaries and their physicians were being besieged by pharmaceutical plans that few could understand.

The first three weeks have been catastrophic. More than a dozen states have had to pitch in to provide emergency supplies, and some of them are seeking reimbursement from the federal government.

How did this long-studied program, one of President Bush's proudest boasts, start in such chaos? One answer is to be found in the intense lobbying by pharmaceutical companies and managed-care organizations that accompanied the development of the program in Congress.

Public Citizen, a public interest organization, found that 952 lobbyists spent a total of $141 million in 2003 making sure that the Medicare money would be siphoned through their companies. This was a free market run amok.

Many of the lobbyists had come through the revolving door from Capitol Hill. In the end, the 415-page bill was negotiated behind closed doors in a Senate-House conference committee. The lobbyists earned their keep. The provisions they promoted helped to ensure $531 billion for their clients over a 10-year period.

Facing disaster now, as with Katrina, the Bush administration is trying to plug the hole. The administration has told the insurers they must provide an emergency 30-day supply of any drug the beneficiary was previously taking, with seniors charged no more than $5 per drug. This is only a stopgap measure. The entire program may have to be reviewed.

So much for the Bush version of a free market.

• Daniel Schorr is a senior news analyst at National Public Radio.