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WYDEN’S “MEND” ACT WILL ENHANCE SENIORS’ MEDICARE PRESCRIPTION DRUG COVERAGE
Drug prices show sharp spike in recent weeks; bipartisan bill introduced today gives bargaining power to HHS, can help seniors better afford medicines

February 1, 2005

WASHINGTON, DC – At a press conference this morning, U.S. Senator Ron Wyden (D-Ore.) unveiled the bipartisan Medicare Enhancement for Needed Drugs (MEND) Act, legislation he authored with U.S. Senator Olympia Snowe (R-Maine) to strengthen the drug coverage offered to seniors under the 2003 Medicare prescription drug benefit. The MEND Act directly addresses the crisis of skyrocketing drug costs in a number of ways, including giving 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, and requiring ongoing information about savings in various plans and the prices of prescription drugs across multiple markets. The bipartisan bill is also cosponsored by U.S. Senators Russell Feingold (D-Wisc.), Dianne Feinstein (D-Calif.) and John McCain (R-Ariz.).

“The MEND Act will give seniors across the country, in rural and urban areas, in both private plans and Medicare-operated fallback plans, the clout they need in the marketplace to get a fair deal on the medicines they need. For the sake of Oregon seniors and millions more nationwide, it’s clearly time to inject bargaining power and other common-sense solutions into the Medicare drug benefit,” said Wyden.

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. MEND grants the Secretary specific authority to bargain for better prices and improved access to medicines in the same way that private insurers and private businesses negotiate for lower costs in bulk. This effectively levels the playing field for more seniors; the MEND Act requires the Secretary of HHS to negotiate for “fall-back” plans, which are Medicare-operated plans designed to give more choice to seniors who live in areas with limited private options, and also in any case where a private insurance plan asks for help in negotiating lower drug prices.

Also in MEND, 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 help seniors 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.

Additionally, the MEND Act writes into law a request that Wyden and Snowe made last December for the Government Accountability Office (GAO) to track ongoing changes in drug prices from 2000 to 2003. After conducting that review, the GAO will continuously review the retail cost of prescription drugs used most by seniors through April 1, 2006. This step is essential to ensure that pharmaceutical companies do not arbitrarily increase drug prices as the Medicare drug benefit takes effect; a Wall Street Journal report has suggested that a sharp spike in some drug prices in recent weeks may be partly in anticipation of the drug benefit. MEND also requires GAO to compare drug prices negotiated by DOD and the VA against other privately run systems, providing 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. Medigap coverage is any private health insurance purchased by individuals to supplement services not covered by Medicare (e.g., deductibles, co-payments, and outpatient prescription drugs).

In December 2003, Wyden vowed to strengthen the saving power of the new Medicare prescription drug benefit for seniors. He and Snowe 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 Wyden is a member.

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