CHICAGO, IL -  In the week marking the two month anniversary since the Medicare drug benefit took effect, U.S. Representatives Rahm Emanuel (D-IL) and Jan Schakowsky (D-IL) held a press conference calling on Congress to re-open the law and give the Secretary of Health and Human Services the authority to directly negotiate on behalf of Medicare beneficiaries. Emanuel and Schakowsky highlighted the Center for Economic & Policy Research (CEPR) report entitled, “The Savings from an Efficient Medicare Prescription Drug Benefit.” The study found that if Medicare directly negotiated with the pharmaceutical companies, the potential savings would be enough to fully fund the drug benefit with no contribution from beneficiaries and leave a surplus of $40 billion over 7 years.

“These numbers are proof that American taxpayers and seniors are being needlessly taxed for a benefit plan that only benefits drug companies and HMOs,” said Emanuel. “If Medicare directly negotiated with the pharmaceutical companies - like the Veterans Administration does and foreign countries do – the potential savings are so large that it would be enough to fully fund the entire drug benefit. Seniors would not be forced to pay any money out of their pockets, and the federal government would save $40 billion over 7 years.”

Last month, the CERP issued “The Savings from an Efficient Medicare Prescription Drug Benefit,” which found that Medicare drug benefit is far more costly than necessary because Congress failed to pass legislation that would make the program efficient. Medicare pays a higher price for drugs than countries like Australia and Canada do because Congress prevented the department from being able to directly negotiate with pharmaceutical companies.

“The fact is, direct negotiation works. The Veterans Administration negotiates lower drug prices for millions of veterans every day,” said Emanuel. “And in October of 2001, after anthrax was found on Capitol Hill, then-HHS Secretary Thompson went directly to Bayer, and negotiated a $.95 deal for a $4.67 tablet of Cipro for government workers. Through negotiation, the federal government brought down the price of Cipro by 490%.”

Emanuel and Schakowsky today called on Congress to re-open the Medicare drug law and make necessary changes to make the program work for our seniors.

“The Medicare Part D disaster is too confusing, too complex, and too costly. This benefit was crafted to benefit drug and insurance companies, instead of seniors and people with disabilities,” said Schakowsky, who is an original sponsor of H.R. 752, the Medicare Prescription Drug Savings and Choice Act, which would create a Medicare-administered benefit. “Beneficiaries deserve a uniform plan that allows Medicare to negotiate with the drug companies to keep prices low.”

The Medicare Prescription Drug Savings and Choice Act instructs the Secretary of Health and Human Services to:

Offer a nationwide Medicare administered drug plan in addition to the plans being offered by the private insurers.

Negotiate group purchasing agreements on behalf of beneficiaries who receive their drugs through this Medicare-administered plan.

According to the CEPR report, a Medicare-administered benefit like that in the Medicare Prescription Drug Savings and Choice Act could provide a savings of $40 billion for the millions of beneficiaries enrolled in Part D plans.