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Medicare Drug Benefit Gets Another Chance

Cheryl A. Thompson

With pharmaceutical industry leaders signaling a readiness to compromise, chances are improving for Medicare to provide a prescription drug benefit to outpatients.

Two weeks before President Clinton's State of the Union Message in January, the chairmen of Amgen and Merck announced that the pharmaceutical industry could settle for legislation providing a drug benefit without comprehensive reform of the Medicare program. This concession, reported Jan. 14 by the New York Times, was offered with the proviso that addition of a drug benefit be considered a step toward an overhaul of Medicare. 

The announcement signaled a partial reversal of a statement the Pharmaceutical Research and Manufacturers of America (PhRMA) issued in November. At the time, the industry group said it "strongly supports expanding prescription drug coverage to seniors through a reformed Medicare program." 

In late December, findings by the Congressional Research Service—indicating that pharmaceutical companies' profits have been taxed at a lower level than other industries—prompted a strong reaction at the White House. According to the Dec. 25 New York Times, White House officials said that continued resistance by the pharmaceutical industry to Clinton's plan for adding a drug benefit to Medicare would bring on price controls, which the industry vehemently opposes. 

Days before the January announcement by the pharmaceutical industry, Representative Pete Stark (D-CA) issued a statement linking a prescription drug benefit in Medicare with reduction of medical errors, an issue that has gained momentum since the release of an Institute of Medicine report in December. "The single best thing [Congress] could do to reduce medical errors for seniors quickly would be to pass a universal prescription drug benefit." In April 1999, Stark had proposed legislation to add an outpatient prescription drug benefit to the Medicare program. 

AARP Public Policy Institute recently reported that prescription drugs accounted for an estimated 17 percent of Medicare beneficiaries' out-of-pocket expenses for health care in 1999. 



Pharmacy Groups Agree to United Policy on Drug Benefit


In an Aug. 10, 1999, letter to Senate Finance Committee Chair William Roth (R-DE), nine national pharmacy organizations, including ASHP, outlined their united policy on a Medicare outpatient drug benefit. The organizations support a benefit that, in addition to reimbursement for prescription drug products, includes reimbursement for pharmacists' professional services to ensure appropriate medication use.