States tackle seniors' high prescription costs

While Washington tries to finalize a plan, states offer solutions from rebates to cash.

Retiree Lorraine Johannes lives by herself on $900 per month in Social Security. She takes seven different medicines per day, and when her doctor doesn't give her free pill samples, her monthly prescription bills can total $350 to $400.

Missouri has a law that allows seniors making less than $15,000 per year to get an annual rebate of $200 to help offset the high cost of prescription drugs.

"I'm not destitute; in fact, I consider myself pretty fortunate," says Ms. Johannes, trying to be heard over a chorus of "When the Saints Come Marching In," sung by two dozen seniors marching around a community center here. "But when it comes down to it, the law only covers my medicine for the first two weeks of January. I could use a little more help than that."

Even as Congress and the White House continue to debate the fine points of federal legislation designed to give seniors a break on the high cost of prescription drugs - months after the issue surfaced as a major presidential campaign issue - a number of states have moved forward with their own prescription for the problem.

At least 29 states have passed laws or programs designed to aid seniors whose personal finances are threatened by the spiraling cost of prescription drugs, with 12 of them having taken action in the past two years. Also, several states who already had laws on the books have upgraded them in the past two years, often by expanding eligibility.

The sheer number of states working to whittle down seniors' prescription bills show how badly the help is needed, but their experiences also point up potential stumbling blocks for any federal plan.

Not all the new laws and programs have taken effect yet, and of those that have, many have met with mixed success.

"Ultimately the only solution that is going to be effective is a federal program, because only the federal government has the financial resources to pull it off," says John Rother, legislative director at the American Association of Retired Persons. "Any federal legislation should make a drug benefit part of Medicare, just like hospital or doctor coverage...."

29 states, 29 approaches

The eligibility requirements of the various state programs are, literally, all over the map. Most have a minimum age (65) and a maximum annual salary qualification, which ranges from a low of $10,000 for a single person up to $21,500. Missouri is unique in linking its subsidy to a year-end tax credit. Most states provide a direct subsidy with a host of discounts, deductibles, and cash payments.

Medical experts say the good news is that prescription drugs have become a vital part of healthcare, at the expense of more costly hospital stays and medical procedures.

But because drugs are not covered by Medicare, the reliance on prescriptions shifts the cost burden to users. Seniors with limited incomes and inadequate insurance coverage are most affected.

In European countries, government pressure on pharmaceutical companies has kept a lid on drug prices, but in free-market America, some prescription drugs can cost twice as much as they do across the border in Canada.

Maine takes lead

Maine has taken perhaps the most aggressive stance on behalf of seniors. Under its program, pharmacies could sell prescriptions at discounted prices to eligible seniors and demand rebates from drug companies to cover the discount.

The Pharmaceutical Research and Manufacturers Association labels the measure "antipatient, anti-innovation, and antibusiness." Marjorie Powell, assistant general counsel for PhRMA, argues that dinging drugmakers' profits effectively slows development of cures and treatments for diseases like cancer and AIDS. Thus, she says, in the end it hurts patients rather than helps them.

"There have been a number of studies that have shown that when countries impose price controls, research into new drug development in their country goes down," says Ms. Powell.

While a link between revenue and research dollars may be a given, by one estimate pharmaceuticals were the most profitable of all industrial sectors in the US in the 1990s.

The Maine law recently survived a court challenge, though the case could be appealed to the US Supreme Court. A number of states have drafted bills modeled on the Maine legislation, but are awaiting a final outcome in the courts before bringing the bills to a vote. The Maine law is not yet operational.

Hordes aren't signing up

Despite the political clamor for prescription-drug benefits for the elderly, with three or four exceptions, states have enrolled very few seniors.

"There are several lessons we can learn [from the states' experience]," says Powell. "When you create programs for seniors, you have to provide some extensive enrollment advocacy. You have to find ways to go out and tell seniors about the program and affirmatively get them enrolled."

While a lack of promotion may be limiting the reach of some programs, others say the plans, which are generally limited to the poor, too often strike seniors as handouts, akin to welfare, and are therefore shunned.

Ultimately, incorporation of a drug benefit plan into the Medicare system is viewed as the primary means of mainstreaming the effort.

"The way to do this, in our view," says Mr. Rother, "is to give seniors the same kind of collective bargaining leverage that all the rest of us have through our health insurance plans. If you did that, you really wouldn't need price controls."

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