Update: Prescription Drugs

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• GWEN IFILL:

  The Senate today rejected a compromise Medicare prescription drug plan that would have given full drug coverage, minus a two-dollar co-payment, to seniors who earn less than about $17,000 a year. The plan was the third major prescription drug benefit proposal to fail in two weeks. But other less sweeping measures did make it out of the Senate.

  Here to describe those proposals, which must now win house approval, is Susan Dentzer of our health unit, a partnership with the Henry J. Kaiser Family Foundation. It seems that we do spend a lot of time focusing on what didn't happen. Let's talk about what did happen. First, this notion of generic drug coverage being part of what the Senate could have found a way to agree on, I guess.

• SUSAN DENTZER:

  Yes. In fact, what the Senate did was enact a bill that would speed the access of generic medications to the market. Essentially what is the case now is that brand manufacturers… once a generic manufacturer applies to bring out a generic version of a drug, the brand manufacturers have the ability through several legal maneuvers to delay that. They do that, in some instances, keeping the generic products off the market for a number of years. This bill that was enacted today by the Senate or at least passed by the Senate would in fact remove some of those legal maneuvers, the ability of companies to do that. And in effect, generic products would therefore probably in some instances get on the market faster. And in fact, some of the savings that are estimated to American consumers by virtue of being able to get cheaper generic products range on the order of $60 billion over a ten-year period. So it could be quite substantial.

• GWEN IFILL:

  So what the Senate did today was essentially close loopholes?

• SUSAN DENTZER:

  Close loopholes, basically eliminate the maneuvers that are complicated and technical. But it essentially was a series of legal ploys that manufacturers could engage in to kind of stack up delays, for these products to be okayed by the FDA..

• GWEN IFILL:

  Really about patent law?

• SUSAN DENTZER:

  It was really about patent law and playing games, in effect, with the patent law. And the one common, the drug Paxil, is certified now, is going to be free of generic competition for five and a half years beyond its normal patent life because the manufacturer was able to engage in these procedures and keep the generic drugs over the market at a cost of perhaps as much as two and a half billion dollars over that five-year period to American consumers and held plans and employers and everybody else who pays the bill.

• GWEN IFILL:

  Brand name pharmaceutical companies responded by saying it slowed their ability to develop new drugs. Was that just rejected out of hand by the Senate?

• SUSAN DENTZER:

  By most of the Senators, because the bill did pass 78-21. Yes, I think most people feel that there's still ample patent protection. In effect, brand manufacturers will still be able to get a 30- month stay for the FDA once a generic manufacturer applies to bring out a generic drug, the brand manufacturer can sue and stop it for 30 months. So you'll still have 30 months to go through all the normal legal procedures to make sure that the generic product… that the generic manufacturer really has a right to bring it out. So there will still be a reasonable amount of patent production. It just will be that manufacturers won't have the ability to drag that out for a period of multiple, multiple years and use it as an anti-competitive device.

• GWEN IFILL:

  There was another thing the Senate agreed to, the term is re-importation, but you've done stories about this. It's a phenomenon where people cross the Canadian border looking for cheaper drug, the same drug in Canada they could get here in the United States, and the Senate tried to address that today.

• SUSAN DENTZER:

  Yes. In fact, because the Canadian government negotiates prices with drug manufacturers, drug prices generally in Canada are as much as 50 percent lower than drug prices in the United States for brand name drugs. Health plans, pharmacies, others have said, "why couldn't we just go over to Canada, buy the drugs there at these 50 percent discounts, bring them back, re-import them back into the United States and save a bunch of money for our consumers?" Well, that sounded fairly persuasive, obviously, to the Senate today.

  So under this bill, for drugs in Canada only– it doesn't apply to other countries– not only would health plans and pharmacies be able to go and purchase those drugs in Canada and bring them back into the United States, also individuals would be able for a three-month prescription to order drugs online from Canada, mail order drugs from Canada, and reap savings as well. So the notion is to basically save as much money, and together with the generics provision, it is argued now American consumers will be able to save perhaps billions of dollars s year.

• GWEN IFILL:

  Let's talk a little bit about what the Senate did not do. You've covered extensively a series of prescription drug Medicare benefit bills, which never quite rose to that 60 vote magic number. What were the policy differences that were at stake here, really?

• SUSAN DENTZER:

  Almost everything was the subject of debate and discussion. Number one, the money; Medicare beneficiaries, people 65 and over, it's estimated, will spend $2 trillion on prescription drugs other the next ten years. So the question was if you're going to help at all with Medicare, how much of that $2 trillion are you going to pick up? At the low end, there are proposals to pick up $160 billion over ten years. At the high end, Senate Democrats were pushing proposals that would have cost $600 billion over a 10-year period.

• GWEN IFILL:

  Did that make a difference in the amount of benefits they were talking about?

• SUSAN DENTZER:

  Absolutely, because the amount of money you're willing to spend will drive not only what kind of benefit you can provide, can you pick up half of the cost of the drugs, can you pick up a third of the cost of the drugs — what are the deductibles, what are the co- payments required, and most important, who gets those benefits? The proposal that went down to defeat today was targeted not just at low-income individuals, but also at individuals who have what's referred to as catastrophic drug cost, who spend a total of more than $4,000 a year or so out-of- pocket on their drugs. So do you address the low-income? Do you address the catastrophic, or do you address, as many of the Senate Democrats insisted, including people who refused to vote for the proposal today — wait a minute. Medicare is a universal program. We've got to give it some help to everybody. So all of that was wrapped up in the debate over how big the package was going to be, who was going to be helped.

• GWEN IFILL:

  There is obviously a big emphasis on low-income Medicare recipients and trying to give them some relief. Did anything in these bills speak to middle class Medicare recipients?

• SUSAN DENTZER:

  The broadest Democratic proposal would very much have done that. That's part of the reason it costs $600 billion over ten years. In addition, there was a big debate over the delivery mechanism, who actually delivers the benefits to you. The Senate Democrats have been pushing a plan, very much akin to what most Americans in private health insurance have today. Somebody pays the overall bills, but when you go to get your drugs, you're dealing with something called a pharmaceutical benefits management firm or Medco, Express Scrips, what have you. You mail order the drugs from them, they check your drug interactions, et cetera. The Democrats wanted that to be the delivery mechanism. That wasn't private enough for the Republicans. They very much wanted the government out of the picture altogether, and perhaps even have private health insurance plans deliver these benefits.

• GWEN IFILL:

  A very classic kind of party division about ideology as much as about policy.

• SUSAN DENTZER:

  Absolutely right. And then there were perfect mutations in between. So on all of these issues there really was no sufficient meeting of the minds to get to the 60 votes. But this is an important point that all of the Senators on all sides made today. Almost every proposal garnered at least 50 votes in this vote.

• GWEN IFILL:

  Does that mean that when people say this is dead for the year, that it's truly dead, or this conversation continues?

• SUSAN DENTZER:

  The conversation continues, and again, almost everybody in every party said that that would probably be the case over August, that there would be an attempt to resurrect each of these bills to again forge a real compromise, and there's a great push to get this back into the Senate Finance Committee, which is where in theory it should have originated in the first place in the view of many. In fact, that didn't happen because the Senate Finance Committee was unable to get its act together to get a bill together. And so this generics bill was brought onto the floor several weeks ago as a vehicle to pass everything else. So there's an effort now to go back and start the process all over again. And there will be an effort over the next few weeks to see whether that can be achieved.

• GWEN IFILL:

  As always, thank you very much, Susan.