Prescription
Drug Pricing Pathfinder
Current Attempts to Control Drug
Prices
In the last year, dozens of proposals to control drug prices and improve prescription drug access for the uninsured or underinsured have hit Congress and state legislatures. The most popular plan at the federal level is the addition of a drug benefit to Medicare. States have floated more radical proposals, including imposing caps on retail pharmaceutical prices. The states have moved more quickly than Congress, and several pieces of significant legislation have been passed or are close to passing. The plans are discussed briefly below, with links to additional information.
1. President Clinton's
Medicare Plan
It seems very likely that some version of a Medicare prescription coverage plan
will pass; most major players, including the Pharmaceutical Industry's mouthpiece,
PhRMA, seems to be in favor of it, and it
is politically very popular: the AARP (formerly
the American Association of Retired Persons, but now just called "AARP")
is a political force to be reckoned with. Vice President / Presidential Hopeful
Al Gore attended the AARP convention on May 18 and promised to support the prescription
addition. However, it is unclear what form that plan will take, since so many
pieces of legislation have been introduced.
The Plan
It is hard to say precisely what The Plan is at this point, since the President,
Congress, and the drug industry have been bickering over specifics. The President
supports a "voluntary" drug benefit, which would probably involve
some sort of premium payment or copayment on the part of Medicare Enrollees
who choose to purchase the benefit. President Clinton announced in April that
he plans to convene a conference this summer with researchers and representatives
of beneficiaries, purchasers, pharmacists, and pharmaceutical manufacturers
to clarify pricing and discounting practices and their impact on Medicare beneficiaries.
Look for something more specific later in the year. Click here for links to
White House Briefings,
including the President's statements on Medicare and his most recent press conference.
Other Publications
The Kaiser Family Foundation, a nonprofit organization
devoted largely to health-policy issues, in cooperation with the League of Women
Voters, has produced a guide to the top five election-year health issues, including
prescription drug coverage for Medicare beneficiaries. The guide is entitled,
"Join the
Debate: Your Guide to Health Issues in the 2000 Election." The guide
provides a concise overview of the Medicare coverage issue, beginning on page
23.
2. Congressional
Bills
A truly dizzying number of bills have been introduced in Congress in the last year to either add a drug benefit to Medicare or control drug prices or do some combination of the two. Take a look at the following bills, but be on the lookout for bills that either die in committee or are consolidated with other bills. I found these by doing a search for "prescription drugs" in the Congressional Information Service (CIS) database, a subscriber-only database. But you can get them in Thomas for free (see below):
Bills introduced in 1999 (106th Congress, 1st Session):
H.R. 664, Prescription Drug Fairness for Seniors Act of 1999
H.R. 634, Medigap Access Protection for Seniors Act of 1999
H.R. 723, Making Affordable Prescriptions Available for Seniors
H.R. 805, Generic Drugs Access Act of 1999
H.R. 886, Medicare Prescription Drug Coverage Act of 1999
H.R. 1109, Medicare Outpatient Prescription Drug Coverage Act of 1999
H.R. 1495, Access to Prescription Medications in Medicare Act of 1999
S. 1942, Pharmaceutical Aid to Older Americans Act
H.R. 3319, Prescription Drug Benefit Equity Act of 1999
Bills introduced in 2000 (106th Congress, 2nd Session):
H.R. 3636, Pharmaceutical Freedom Act of 2000
H.R. 3665, Prescription Price Equity Act of 2000
To search for bills in Congress, visit the free, ever-improving legislative
web site Thomas. Thomas allows you to search
for current and past bills (bill summaries back to 1975; full text of bills
only back to 1989). Searching can be a bit frustrating because of the enormous
volume of legislation--a search may return an unmanageable number of hits. Make
your search as specific as possible by filling in the sponsor's name, dates,
topics, etc. where prompted. If you have the bill number, as listed above, you
should be able to pull it up very easily. Just make sure you are in the right
year / Congressional session.
Hearings
Congress has held a number of hearings on the issue of prescription drug coverage
for seniors. Click below for selected testimony:
American Enterprise Institute Testimony. AEI is a large, well-respected
think-tank located in Washington, DC. The on-line version of the testimony contains
several helpful charts and graphs.
(HCFA) Testimony.
The Health Care Financing Administration, as the Medicare administrator, would
likely have the responsibility for implementing a Medicare Drug Benefit.
3. State Efforts
a. Maine
The state of Maine recently passed a law putting it at the forefront of the
price-regulation movement. The law passed from Senate bill, LD 2599, authorizes
the state to create "Maine Rx Program," effectively a purchasing pool
on behalf of its citizens who are uninsured or whose insurance does not cover
prescriptions, as well as citizens on Medicaid and some elderly citizens. Approximately
half the population of Maine (525,000 people) will be covered. (Important Note:
be sure to check the amendments to the bill, as the final version passed and
signed by the governor is comprised almost entirely of Amendment S-803.
And Warning: these links appear to be changing very quickly; my link to LD 2599
disappeared two days after I put it up. If the S-803 is not there, you can search
through the Main Maine page.)
The law is less radical than an earlier version, which required the state to establish a price control system that would have required drug manufacturers to bring their prices down to Canadian levels as early as October, 2001.
b. Vermont & Connecticut
Vermont's legislature is considering a law patterned after the original Maine
law. Connecticut is also moving aggressively to reform prescription drug prices.
Try the above links to their legislative web sites.
c. The New England Consortium
The six New England states (Maine, New Hampshire, Vermont, Rhode Island, Massachusetts,
Connecticut) and New York have been meeting since last fall to try to come up
with a joint plan to either form a purchasing cooperative or otherwise control
pharmaceutical prices. Motivated by their citizens' bus trips into Canada to
buy cheaper drugs, the New Englanders have been in the forefront of the price-control
movement. Pennsylvania is reportedly considering joining the group.
Sources:
While the group has been meeting for some time and has attracted considerable
attention in the popular media, little official information is available. The
delegations from each state are led by the governors' offices, so that
is a good place to start. For popular coverage, see:
"Lawmakers Come to Boston to Battle Rising Drug Costs," The
Boston Herald, Friday, February 11, 2000, page 37.
One of the strategies the group is looking at is whether or not the huge variation in price is a violation of the North American Free Trade Agreement (NAFTA), which removed "barriers" to trade and investment in both goods and services between Canada, the United States, and Mexico with the goal of stimulating economic growth in all three countries. NAFTA eliminated many tariffs immediately, and provided that virtually all tariffs would be phased out over 15 years. It would seem that proposals to allow U.S. consumers to purchase drugs in Canada are philosophically in line with the idea of "free trade," and the New England Consortium is looking into whether the Reimportation Act (See the section on Statutory Protection) actually violates NAFTA. Look for information on this soon.
For helpful introductory information on NAFTA see:
d. California
Legislation currently pending, SB
2075, would impose price controls on pharmaceutical companies similar to
the original Maine plan.
Last fall, California passed SB
393, which caps prices for California Medicare participants at Medicaid's
negotiated rates when they fill their prescriptions at Medi-Cal participating
pharmacies. The provision only stays in effect until 2003, and may be vulnerable
to a Commerce Clause challenge (see the Pathfinder Page on Potential
Problems), unless the state is funding the difference.
e. Other States
According to the National Conference of State Legislatures (NCSL),
16 states have created pharmacy assistance plans to help the elderly and uninsured
obtain needed medicines. Click
here to see NCSL's state-by-state chart. Look for the list to grow. NCSL
is your best bet for one-stop shopping on what the different states are doing.
4. Organizations
Look for many organizations to get involved in the debate over pharmaceutical
prices as the year goes on. In addition to the organizations who have produced
information on industry pricing (See the Pathfinder Page on Pricing
Sources), also see:
The National Academy of State Health Policy
(NASHP). NASHP has not yet done any publications on prescription drug pricing,
although a representative told me the issue is on the agenda for their Annual
Conference, Aug 6-8, 2000 in Bloomington MN.
NASHP is located in the hotbed of health policy activism, Maine, at:
50 Monument Square, Suite 502
Portland, ME 04101
Phone: (207) 874-6524 Fax: (207) 874-6527
The federal Agency for Healthcare Research
and Quality (AHRQ), monitors health care costs and utilization. Keep an
eye out for publications and information on drug pricing from AHRQ, located
at:
Executive Office Center, Suite 600
2101 East Jefferson Street
Rockville, MD 20852
5. News Sources
For current events coverage of prescription drug pricing and other health
policy issues, try these sites:
HealthLaw.org has a
news headlines page with links to the stories, where available. The links tend
to go out of date quickly, but the page lists the article title, date of publication,
and name of publication.
The Bureau of National Affairs' (BNA) weekly Health Care Policy Report
is an excellent source for current news on state and federal legislation affecting
pharmaceuticals. The publication is available by subscription only, but if you
have access to it, or to a library that does, it is very good.
You can contact BNA at:
1231 25th Street NW
Washington, DC 20037
Phone: (202) 452-4200
Many publications provide no more than anecdotal or minimal information, but
the New York Times in particular has done
a good job of covering the issue since late 1999. The Washington
Post is another good news source. Both are available on-line. Viewing the
current day's edition is free, and searching past issues is free and fairly
easy. The Times charges about $2.50 to retrieve archived articles; the Post
charges $2.95 between 6 a.m. and 6 p.m. (E.T.) Monday-Friday, $1.50 at other
times.
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