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Wyden, Snowe "MEND" Act Will
Enhance Drug Coverage Under New Medicare Law, Confront Spiraling
Costs
Bipartisan Legislation Builds on the
Medicare Benefit to Improve Access
February 05, 2004
WASHINGTON, DC – U.S.
Senators Olympia Snowe (R-ME) and Ron Wyden (D-OR) announced
the bipartisan Medicare Enhancement for Needed Drugs Act (MEND
Act) today, legislation that would strengthen the drug coverage
offered to seniors under the recently enacted Medicare prescription
drug benefit. The MEND Act directly addresses the crisis of skyrocketing
drug costs; it grants the Secretary of the U.S. Department of
Health and Human Services (HHS) the specific authority to negotiate
lower prices for drug purchases through Medicare, creates incentives
for participating Medicare plans to negotiate the best possible
drug prices, institutes penalties on drug manufacturers that
try to limit access to lower price reimported prescription drugs,
and gives Congress and seniors ongoing information about the
prices of prescription drugs across multiple markets. The Senators
unveiled the legislation’s principles at a press conference
this morning.
"The cost of prescription
drugs places an increasingly heavy burden on the citizens of
this country. In 2002 alone, drug prices increased by almost
9 percent -- that is over three times the rate of inflation," said
Snowe. "For the average American, including many in my home
state of Maine, these prices are simply not affordable. If costs
are allowed to increase unchecked, the very drug benefit the
Congress passed only three months ago could become threatened.
When I voted for this legislation last fall, I understood that
it was not all that it could have been or should have been, and
promised to pursue legislative improvements, specifically to
the crisis of prescription drug costs. The Medicare Enhancement
for Needed Drugs Act, or the MEND Act, that Senator Wyden and
I are introducing today builds on the framework that was established
last fall to enhance and preserve its long-term value. Comprehensive
in its approach, this legislation works by tracking drug costs
across various markets, creating incentives for participating
Medicare plans to negotiate for the most competitive drug prices,
removing the ban that prohibits the Secretary of HHS from negotiating
drug prices, and imposing penalties on drug firms that would
limit access to low cost reimported prescription drugs. Senator
Wyden and I understand that what is critical is getting our seniors
affordable prescription drug coverage immediately. They simply
can not afford to wait."
"If the Medicare
drug benefit is going to work best for seniors, we need to bring
down exploding drug costs. Lower drug prices means lower premiums,
less money spent out-of-pocket, and a better Medicare drug benefit," said
Wyden. "The MEND Act gives seniors a powerful one-two punch
to fight back against high prescription drug prices. It allows
them to band together to negotiate lower drug prices with the
power of the HHS Secretary, and to make informed choices about
which plans are getting the most drug savings. Seniors will save
money on each prescription and the new Medicare benefit will
have even more buying power. The law that Senator Snowe and I
voted for last year took an important step forward in providing
a significant benefit to the seniors least able to afford their
drugs and to those who face the highest drug costs. But I said
last year that I intended to strengthen seniors’ coverage
under the new law, and I believe the MEND Act is a bipartisan
solution seniors and the entire Congress can embrace."
The MEND Act repeals Section
1860D-11(I), or the non-interference provision, of the Medicare
prescription drug benefit, which prohibits the HHS Secretary
from negotiating for lower-cost drugs in bulk, and grants the
Secretary specific authority to bargain for better prices and
improved access to medicines.
As an incentive to participating
plans in the Medicare program to negotiate the lowest possible
prescription drug prices as well, the legislation directs $500
million from the Medicare Stabilization Fund to be used to the
Secretary of HHS to offer incentive payments to Medicare prescription
drug plans that are able to secure negotiated prices that on
average are within ten percent of VA or DoD negotiated price,
whichever is lower. The Centers for Medicare and Medicaid Services
(CMS) would be required to determine the negotiated savings received
from each plan by the average Medicare beneficiary. This would
allow seniors to make an "apples to apples" comparison
to determine which plan provides the best savings. This information
would be shared with all beneficiaries during the annual fall
enrollment period.
The MEND Act also works to increase
access to lower cost reimported prescription drug costs by opening
access to these markets. The bill prohibits any company that discriminates
publicly,
privately or otherwise against foreign retailers or wholesalers
who pass along discounts to consumers living in the United States from
taking advantage
of the dollar to dollar advertising deduction allowed under the
United States tax code. This provision would stop drug manufacturers from
limiting
shipments to foreign countries expressly to prevent reimportation
by American consumers.
Additionally, the MEND Act codifies
a request that Snowe and Wyden made last December for the Government
Accounting Office (GAO) to review changes in drug prices from 2000 to
2003, focusing
on the drugs most likely used through April 1, 2006. This step
is essential to ensure that pharmaceutical companies do not arbitrarily
increase drug
prices following passage of the Medicare drug benefit. This legislation
also requires GAO to compare drug prices negotiated by the Defense
Department and Department of Veterans Affairs against other privately
run systems.
This would provide critical information on whether the government
or private plans negotiate for the best prescription drug prices.
Lastly, in an effort to confront concerns
that the Medicare prescription drug benefit restricts Medigap
coverage, this legislation directs the Secretary of HHS to work with the
National
Association of Insurance Commissioners to conduct a review of
the changes to the Medigap policies in the new drug benefit to evaluate
its impact
on Medicare beneficiaries.
Both Snowe and Wyden voted for the
Medicare prescription drug benefit, H.R.1, that passed the Congress
last fall and promised to strengthen it in this session. The Senators
have
a long history together promoting bipartisan, common-sense legislative
solutions on health care; in 1999, they introduced the first
bipartisan Medicare prescription drug bill known as the SPICE Act. That
same year
as members of the Senate Budget Committee they established the
first reserve fund to set aside $40 billion for the creation of a drug
benefit.
The MEND Act is expected to be referred
to the Senate Committee on Finance, of which Snowe is a member.
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