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Prescription Drugs

The Senate plunges into debate over prescription drug coverage for seniors.

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  • RAY SUAREZ:

    Now some perspective from two health care experts. Michael Weinstein is a former columnist for the New York Times, who specialized in health care issues. He is now an economist with the Council on Foreign Relations. Gail Wilensky is a senior fellow at Project Hope, a foundation for international health education. She was an adviser to George W. Bush on health care issues during the 2000 campaign.

    Gail Wilensky, what in your view must any eventual successful plan accomplish and, do any of the current proposals come close to doing it?

  • GAIL WILENSKY:

    The first objective is to help seniors get access to prescription drugs, but the lack of prescription drug coverage is not the only problem in Medicare. The biggest issue that is being ignored right now is Medicare is still a 1960s bill, and taking on a very expensive new benefit, particularly the one that was described by, as being attributable to Graham, Miller and Kennedy, without taking on how we are going to pay for Medicare in the 21st century and make it a 21st century bill really misses the point that it's not just prescription drugs that's the problem.

  • RAY SUAREZ:

    So is it the Republican bill that uses a private model and is the lowest cost of the three, is that one closest to where you'd want to end up?

  • GAIL WILENSKY:

    Well, there are several issues that have to be decided by the Congress and by the public at large. First is, do we want prescription drugs to be handled the way other parts of Medicare that it does; that is, through a price controlled and administered controlled system run by the government? Or do we want to try to move away to having a private sector run parts of Medicare, in this case, the prescription drug?

    The second thing is how much at this point do we think we can commit when we haven't really figured out how we're going to finance Medicare for the baby boomers? This is a very serious issue, and the bigger the package that's being promised, the more it raises the question of how are we going to finance what we've already promised when the baby boomers come along.

    I don't think any of the bills really take on Medicare reform as much as they should. There is an attempt by the tripartisan bill that you referenced to do some Medicare reform and there's a little Medicare reform in the House Republican bill. For my money none of the bills really takes on the question of how to make Medicare viable for the 21st century.

    The more you spend on prescription drugs however now, not knowing how we're going to pay for what we've promised, the more difficulty we're going to have when it comes to making sure that Medicare is viable for the baby boomers a in 21st century.

  • RAY SUAREZ:

    Michael Weinstein, what's your bottom line for an eventual plan? What do you feel it needs to accomplish and do any of the current plans proposed on offer come closest to meeting those goals?

  • MICHAEL WEINSTEIN:

    Well, let me mostly agree with Gail but be a little bit more I suppose blunt. Medicare is a terrible insurance plan. Very few private employers would offer a plan as skimpy and as unadministered as Medicare. And my fundamental problem with it is not so much the cost, which is serious– and I agree with Gail about that– but that it has very few quality controls.

    We expect private plans or at least the better of them to worry whether their enrollees are taking drugs that clash or are taking drugs that are actually destructive when taken in combination. We expect the better private health care plans to put in controls, to monitor, to check, to make sure that people's illnesses are being treated correctly.

    The problem, therefore, is that in the Medicare plan, you almost have none of that. And so if we're going to start fiddling with Medicare, to me the fundamental bottom line is we have to do it in a way that has a promise of improving the quality of this plan and none of the proposals meet that test. There are differences between the Democrats and Republicans, but they're not large. They're basically trying to tack on a drug benefit mostly separate from the regular Medicare plan that's very difficult to do. It's very difficult to make that workable. I don't think the Republican private sector plans have a workable way of doing that.

    The other way of just leaving it up to the standard old Medicare way of doing it reinforces a Medicare plan that, as I said, is just not very high quality.

  • RAY SUAREZ:

    Is… has there been a change in the American way of providing medicine that makes the… that puts drug coverage front and center now in the way people talk about getting their medical care? When you talk about tacking on drug coverage to an already existing plan, are there reasons why drugs now loom larger in the way people think about gaining medical care?

  • MICHAEL WEINSTEIN:

    Well, the answer is surely yes. I mean, no private plan doesn't cover drugs. Drugs are essential to modern medicine. You would never pass the act in the '60s without drugs if we had the current medical procedures and medical possibilities.

    So the issue about including drugs is not a question. Of course all of us want drugs in Medicare. The question is, do you want to reform the entire Medicare system at the same time that you put drugs into the basic benefit package? Or do you want private plans as the Republicans propose, being sold as a stand-alone benefit by insurance companies? That's a very, very difficult economic hurdle. It's just very difficult to structure it so that the health plans do the right thing.

  • RAY SUAREZ:

    Gail Wilensky, do you agree with the analysis just given by your colleague?

  • GAIL WILENSKY:

    I do. Let me explain why it's such a serious problem. We know now that Americans particularly older Americans and sicker Americans, use a lot of prescription drugs. It's very important that there is some oversight and analysis so that the drugs don't interact in an adverse way with each other. We know that there are a lot of hospital admissions that occur because of these drug interactions.

    Having a prescription drug bill that is just a stand-alone addition to the extent that that is what would happen will encourage this kind of behavior. We need to have prescription drug coverage but it needs to be part of a much broader reform in terms of how health care is being provided. In Medicare in many ways we've been moving in exactly the opposite or the wrong direction, trying to focus on what is the right or the just price the government should pay as opposed to trying to find ways to pay for better quality — to get information out to the public, which is actually being done more aggressively by the Medicare program now, but to find ways to really differentiate between who provides good services and who doesn't and to reward that.

    In Medicare we move exactly in the opposite direction, focusing on exactly what price should we pay for something and allowing for no differentiation. That's really not the direction we need to go and it's not the direction that we're struggling with in the private sector, how to improve quality, how to pay for what counts and not pay for what doesn't count.

  • RAY SUAREZ:

    How does the debate that's running in tandem over generic drugs and patent rights fit into this wider debate of what you've been talking about?

  • GAIL WILENSKY:

    Well, there is some relationship in the sense that the issues on patent rights and reimportation and generics is looking at pricing issues at least indirectly. They raise a whole host of very difficult problems, including safety issues which was raised by Secretary Shalala at the end of the Clinton administration on reimportation, how to make sure you have bio equivalents, et cetera.

    But in a more fundamental way, the debates that are going on in Congress now get at deep philosophical issues of how to try to moderate spending or to get better spending for the value of care we receive. Do we do it by administered pricing, which is what traditional Medicare has relied on? Do we try to use competitive systems or incentives to get better value for the money we spend? This is a very fundamental philosophical difference in addition to the very large differences between the legislative packages that are being considered in the senate and between the House and the Senate.

  • RAY SUAREZ:

    Well, we saw Michael Weinstein, Senator Dorgan, holding up two bottles on the Senate floor today, one a Canadian bottle of an arthritis drug, one an American bottle of the same drug, one costing three times the other. You're an economist. Can you give us some insight on to why that is?

  • MICHAEL WEINSTEIN:

    The fundamental economic fact about drug manufacturing is that the manufacturing cost, the cost of producing the pill, is trivial. And the whole… the huge cost is the research and certification — all the costs that are spent before the first pill is sold.

    So once the pills are approved and sold, then there's always this room for selling the pill for anything slightly more than its manufacturing cost. which is a few pennies but if the manufacturers only got that few pennies on the pill, they would never be able to reimburse themselves for all the huge research costs that have already been spent, so it's a game to– and not a very uplifting game– to point to these gross disparities that can happen because some countries control prices because it's not their companies that are doing the research and the innovation. Drug manufacturing is subject to the worst kind of political gamesmanship.

    I think there are grounds for some reimportation rights. There are quality control problems that Secretary Shalala ran into but it's not quite as easy or perverse as Senator Dorgan was suggesting by holding up these two bottles with different colored caps.

  • RAY SUAREZ:

    Finally Gail Wilensky, Senator Gramm talked today of his fear that we could end up closing out this Congress without having accomplished any of the plans, without providing insured and uninsured Americans with some kind of drug coverage. Given the widespread feeling that this should be accomplished, is there still some justification in that fear, that maybe nothing will be done?

  • GAIL WILENSKY:

    Oh, I think he's very likely to be right. The Senate is not acting in a way that suggests that it's seeking to get a bill that could be compromised with the House and then sent on to the President. There's no effort to try to develop a bill by the majority leader that would reflect Republicans' and Democrats' interest. As you indicated they need 60 votes to be able to get it on to the floor of the Senate so they can have a debate. There are positionings going on between the various sections, sectors, in the Senate but nothing that suggests that anyone expects or is acting in a way that will produce a bill that could actually be enacted.

    It's too bad that the poorest of seniors or those with very high costs in the pharmaceutical area can't find a way to get some interim help while we continue to debate these very serious issues where there are deep philosophical differences. I wish they would pass an interim measure, but I don't see any indication that that's likely to happen.

  • RAY SUAREZ:

    Gail Wilensky, Michael Weinstein, thank you both.

  • MICHAEL WEINSTEIN:

    Sure.

  • GAIL WILENSKY:

    Thank you.