Era of designer drugs forces Congress to retool Medicare

The week that the White House heralded a map of the human genome, the House rushed through the biggest Medicare expansion in history.

These two events are not unrelated.

Prescription drugs are already outstripping the budgets of many seniors, especially the 13 million Medicare beneficiaries who have no insurance to help pay drug costs. And the promise of new designer drugs expected to come out of the mapping of the human genetic code will only drive that demand higher, experts say.

Already, costs are high enough to put significant pressure on the Republican-led Congress to act. After a bitter floor debate Wednesday, the House voted 217 to 214 to extend drug coverage to all Medicare beneficiaries.

But more than an 11th-hour GOP bid to win seniors' votes in November, the problem of retooling Medicare to cope with an era that promises a prescription drug for every ailment is now dead center in Election 2000.

It's an issue GOP leaders had been reluctant to take up. With Medicare projected for bankruptcy in 25 years, the notion of expanding the program to include a major new entitlement was not on the Republican agenda.

In a close election year, however, the issue was too hot to leave to Democrats. A June 8 poll for the House Republican conference warned of vulnerability to the charge that "Republicans aren't doing anything to help seniors." Within weeks, the GOP leadership called hearings and put a prescription-drug plan on the fast track.

Democrats denounced the Republican plan as a "sham." On the eve of the vote, they set up a round-the-clock "war room" in the Capitol basement to rally opposition to the bill and staged a walkout on the House floor, to send a "very strong message" that their alternative should be considered. The president promises a veto.

Prescription drugs are a key issue in many of the 40 close congressional races this year, and GOP incumbents are already retooling their campaigns to feature the prescription-drug initiative.

In fact, the GOP and Democratic plans share many features in common. Both would cover most expenses for low-income seniors and provide incentives to Medicare health-maintenance organizations to provide drug coverage. And both involve cooperation with the private sector to get benefits to underserved seniors.

The $40 billion Republican plan puts responsibility for making the system work largely on insurance companies or pharmacy-benefit managers. Benefits would vary with insurers and region. A typical plan would cover about half of prescription-drug expenses, up to $2,100 a year, with premiums of $37 a month, and a $250 deductible. All drug costs above $6,000 a year would be covered.

The $79 billion White House plan provides specified benefits directed through the current Medicare system. This plan would cover half of a beneficiary's drug costs up to $2,500 a year, with monthly premiums increasing from $24 in 2002 to $50 and no deductible. Democrats would set the cap for out-of-pocket expenses at $4,000.

Democrats claim that the GOP plan provides only the illusion of a solution, and in effect largely benefits drug companies and insurers.

"It's a philosophical difference. The Republicans chose to use the private marketplace to solve this problem, even though it hasn't worked in many parts of this country. We want to ensure a definite benefit through the Medicare system that people trust," says Rep. Karen Thurman (D) of Florida, a leading opponent of the GOP plan.

Under the plan proposed by House Democrats, Medicare ombudsmen or benefit administrators would "guarantee access in rural and hard-to-reach areas," including bonus payments to pharmacies.

Picking up the momentum on this issue, Senators Bill Grist (R) of Tennessee and John Breaux (D) of Louisiana proposed this week a prescription drug plan that establishes a new federal agency to help drive down the costs of prescription drugs. The plan requires discounts negotiated between pharmaceutical companies and insurers to be passed along to beneficiaries.

Insurance companies have testified that over-reliance on private groups to meet the prescription drug crisis will not work. "The concept of so-called drug-only private insurance simply would not work in practice," says Charles Kahn, president of the Health Insurance Association of America. "The likelihood that the people most likely to purchase this coverage will be the people anticipating the highest drug claims would make drug-only coverage virtually impossible for insurers to offer to seniors at an affordable price."

Overall, spending on prescription drugs increased a record 17.4 percent last year, according to a study released this week by Express Scripts of St. Louis, which manages drug benefits for 39 million people. Drug costs are growing at double-digit rates since 1996 - well above the rate of inflation.

What's driving that increase is new drugs and advertising. Drugs introduced since 1992 accounted for 41 percent of drug spending last year, the report says. For the past three years, the sharpest increase in number of prescriptions has been for antihistamines, such as Claritin - an 18.4 percent increase driven by what the report calls "heavy advertising."

(c) Copyright 2000. The Christian Science Publishing Society