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Congressman Bob Borski
Prescription Drug Fairness for Seniors

Providing prescription drugs for seniors has become one of the most hotly debated issues in the 106^th Congress. While the problem is clear, the solution is not. The problem is that prescription drugs have become an imperative part of senior health care, yet costs are soaring and seniors are having a tough time in affording these vital drugs. In fact, 32 percent of our Nation’s elderly do not have any prescription drug coverage. America’s elderly are being forced to choose between food on their table and the prescription drugs prescribed to them by their doctors. While everyone agrees that seniors need better access to prescription drugs, not everyone agrees as to how best provide seniors with such access.

Congressman Borski believes it is the government’s responsibility to ensure that every senior, regardless of income, health status, or current access to prescriptions, has access to affordable, quality prescription drugs. It is imperative to the well being of all seniors that Congress work to create a universal, dependable, defined prescription drug benefit through the Medicare program, and not through the unreliable private insurance market. The private market has proven itself unreliable as millions of Medicare beneficiaries have been virtually disposed of by their Medicare Health Maintenance Organization (HMO) and are facing drastic cuts in benefits, which originally included prescription drug coverage. Whereas Congressman Borski wants to enact legislation that would add a defined guaranteed benefit to the Medicare program for its 39 million beneficiaries, the Majority party would rather have a proposal that is more for those who sell drugs than those who need them! It is difficult to even consider their plan a proposal because it is not administered through the Medicare program. Their "proposal" would not assure availability of prescription drug coverage, it would not be affordable for most seniors (if it happened to be in their area), it is not a specified benefit, and it does nothing to ensure that seniors will no longer experience price discrimination. Their plan is ultimately risky, irresponsible, and provides no guarantee that seniors will be able to get their prescriptions any cheaper or more readily.

When Medicare was created in 1965, prescription drugs did not play a significant role in the Nation’s health care. Due to great advances in pharmaceuticals in the past 35 years, prescription drugs now play a central role in the typical senior’s health care. If we were to create Medicare today, we would never even think of creating it without a prescription drug benefit. No modern health insurance program is without one, and Medicare should be no different.

A typical senior (aged 65 or older) uses over 18 prescription drugs a year! They represent the portion of the population that is most dependent on prescription drugs. Whereas seniors represent only 12 percent of the population, they use more than one-third of all prescription drugs used in the United States! In fact, prescription drugs now account for about one-sixth of all out-of-pocket health spending by the elderly.

Due to the increasing need for prescriptions, and Medicare’s lack of coverage for prescriptions (except for when beneficiaries are hospitalized), seniors are being forced to fend for themselves in getting the coverage they need and deserve. Many seniors have purchased inadequate Medigap plans that cost more than the value of the insurance they provide, or have enrolled in attractive Medicare HMOs that had originally promised prescription drug coverage when they agreed to join Medicare with enactment of the Balanced Budget Act of 1997 (BBA). Unfortunately, seniors are finding that HMOs are not as reliable as they had once promised. Since HMOs began to participate in the Medicare program, they have abandoned over 1.7 million seniors nationwide, and 94,444 in Pennsylvania alone.

As for those who have no Medigap plan or are not involved in an HMO, they are forced to pay these costs out-of-pocket at astronomical rates while they are on extremely limited and fixed incomes. Whereas in 1997, the cost of health services overall increased by 5 percent, the cost of prescription drugs rose by an overwhelming14 percent in the same year. In 1999, Families USA found that the prices of the 50 prescription drugs most commonly used by older Americans rose much faster than the rate of inflation for each of the previous five years. While senior citizens generally live on fixed incomes that are adjusted to keep up with the rate of inflation, the cost of the prescription drugs they purchase most frequently has risen at approximately two times the rate of inflation over the past six years and nearly two times the rate of inflation in the last year. And the annual growth in prescription expenditures is expected to be over 10 percent for each of the next 2 years. Congress must act now to ensure that seniors no longer pay these astronomical costs for prescription drugs out of their own pocket; federal legislation should be enacted.

Thousands of Pennsylvania senior citizens and persons with disabilities that are without prescription drug coverage face price discrimination by pharmaceutical manufacturers. A price survey of ninety-eight randomly selected pharmacies in Pennsylvania, conducted by the national consumer group Public Citizen and Citizens for Consumer Justice shows seniors are being charged retail prices that are more than double the prices charged by prescription drug makers to their most favored customers – about 113% more!

For the top ten drugs used by seniors to treat a variety of illnesses, those in Pennsylvania paid between 48 percent and 231 percent more than drug companies’ most favored customers – HMOs, Medicaid, Veterans Affairs, etc. In addition, the pharmaceutical industry profits handsomely from price discrimination. For decades, brand name prescription drug makers have consistently been among the most profitable industries in America. In 1998, pharmaceutical companies ranked first among all industries in rates of return on equity, assets, and revenues. While our seniors are taking only portions of their required medications, or not taking it at all, the top ten drug companies enjoy annual profits of nearly $20 billion. The pharmaceutical industry claims that high U.S. prescription drug prices are necessary to fund research and development (R&D), yet R&D is a lower priority than profits for the manufacturers. In 1998, the top ten firms put one-and-a-half times as much money into profits as into research and development. Moreover, not everyone pays such high prices. Foreign consumers get U.S. made drugs at a fraction of the price paid by American senior citizens because their governments negotiate fair prices with prescription drug makers. Why should the U.S. be any different? It should not!

Congressman Borski supports three important pieces of prescription drug legislation in the 106^th Congress. The first bill, that seems to have brought the debate on prescription drugs into the spotlight, is Congressman Tom Allen’s bill, H.R. 664, the Prescription Drug Fairness for Seniors Act. This legislation would allow all seniors to purchase prescriptions at the same low rate that large HMOs and some federal agencies experience now. This legislation has been estimated to reduce prescription drug prices for seniors by more than 40 percent. It would be effective upon enactment, the Congressional Budget Office (CBO) has not yet scored the bill, and a discharge petition is available for signature. As of September 6, 2000, the bill had 152 cosponsors and remains in the House Commerce Committee, and House Committee on Ways and Means.

Congressman Borski is also a cosponsor of H.R. 1495, the Access to Prescription Medications in Medicare Act, sponsored by Congressman Pete Stark. This legislation would be available to all Medicare beneficiaries choosing to enroll in Medicare Part B. It would have a $200 deductible, capped at $1,700 per year, with a cost-sharing of 20 percent, and a catastrophic cap of $3000 upon which Medicare would cover 100 percent. H.R. 1495 would be financed through premiums as paid through Part B and additional revenues such as surplus, tobacco tax revenues, Medicare savings, and others. It would be effective almost immediately and a discharge petition is available to Members. As of September 6, 2000, H.R. 1495 had garnered 91 cosponsors, and was being referred to the House Commerce Committee, and House Ways and Means Committee.

Finally, the most recent, as well as all-encompassing piece of legislation that Congressman Borski is supporting is H.R. 4770, the Medicare Prescription Drug Act. Introduced by Leader Gephardt, HR. 4770 would be available to all Medicare beneficiaries choosing to buy into a new Medicare Part D. It would offer all beneficiaries an affordable, guaranteed Medicare prescription drug benefit with no deductible, a 50 percent copayment, and a modest monthly premium. Enrollment would be voluntary when a senior or disabled person first becomes eligible for Medicare or if and when the person loses coverage from an employer, Medicare+Choice plan, or Medicaid. Enrollees would receive Medicare payment for covered drugs from any participating pharmacy and are charged negotiated, discounted prices on all their covered drug purchases regardless of whether the annual benefit was reached. The program would cover Food and Drug Administration (FDA) approved drugs, including immunosuppressive. In addition, beneficiaries up to 135 percent of the poverty would receive full assistance with premiums and cost sharing. Between 135 and 150 percent of poverty, beneficiaries would receive assistance with premiums on a sliding scale. In essence, seniors would finally be guaranteed access to any covered drug prescribed to them by their doctors.

Block Grants

Senator Roth has unveiled a proposal (based on the plan put forward by GOP presidential nominee George W. Bush) that would provide grants to states to help low-income seniors purchase prescription drugs for a four-year proposal until a complete overhaul of Medicare is achieved.

The Roth/Bush grant proposal not only would exclude all middle-income seniors from any assistance, but it would also fail to achieve the stated objective: to provide meaningful assistance to low-income seniors. Furthermore, Congressman Borski argues that providing a temporary program would only distract Members of Congress from the goal of providing real prescription drug assistance to seniors.

This plan would exclude at least 25 million Medicare beneficiaries nationwide, and in Pennsylvania it would exclude 74 percent of our seniors. Nearly three in five Medicare beneficiaries with the highest-prescription drug costs (57 percent) would not qualify for assistance under a low-income plan. Yet middle-income beneficiaries are as likely as low-income beneficiaries to have high prescription drug costs. Nonetheless, it fails at its objective of helping low-income seniors in that less than half of the low-income Medicare beneficiaries that the plan purports to help would likely get drug coverage! About three-fifths, or 55 percent of all Medicare beneficiaries who now have no coverage for prescription drugs would be ineligible for assistance under a low-income plan. And, it excludes the millions of Medicare beneficiaries with inadequate, expensive, and unreliable, managed care or private insurance plans.

The proposal merely creates a fig-leaf temporary program that only delays the implementation of a true, comprehensive, prescription drug benefit through the Medicare program. If enacted, the next Congress will most likely spend more money, resources, and energy to fix this flawed plan instead of enacting a meaningful Medicare prescription drug benefit for all beneficiaries by the year 2002, which would ultimately prove to be more effective in helping low-income seniors overall. This interim step is not needed or helpful in providing all seniors with the medicines they need!

It will be difficult to get states involved in the plan, let alone fully operational by 2001. It is unlikely that all states would implement a prescription drug program under this plan next year because of a) a lack of funding and b) because they are not required to do so. The National Governor’s Association opposes taking responsibility for prescription drugs, and with the time-limited restraints and inadequate funding for this program there is little incentive for states to start up a plan. States have already had great difficulty in enrolling S-CHIP beneficiaries, and giving them this responsibility will only over-burden them with an even greater, more difficult task. On top of that, the Federal "default" plan would not be fully operational by 2001, thereby furthering the problem that seniors will not get their coverage by next year.

More importantly, seniors often reject state assistance programs because they feel these programs are "welfare" and only for "poor people". They want Medicare, not welfare! They have spent their working years building our country, and they should not have to beg for prescription drugs in their working years.

The Bush/Roth plan is just an empty promise for those who actually enroll. Types of drugs covered and number of prescriptions filled may be limited. And there is no guaranteed access to needed drugs or local pharmacies - no guarantee that when a doctor prescribes a medicine to their patient, that s/he will receive their important drugs. In addition, enrollment in their plan would ultimately be capped. With the lack of funding Senator Roth has proposed to offer, states would not be able to provide prescription drug coverage to even the limited group of eligible beneficiaries it proposed to cover. Inevitably, states would accrue harmful waiting lists.

All in all, this plan would deny eligibility to at least 25 million Medicare beneficiaries – most of whom lack affordable, dependable prescription drug coverage today. Due to notoriously low enrollment in state programs, the plans would inevitably fail to assist more than half of eligible low-income seniors. Even the small number of Medicare beneficiaries who overcome these hurdles and actually sign up for coverage would be enrolled in programs that could cap enrollment and/or the number and types of drugs covered. It would also take years to implement programs in all 50 states, and because funding is time-limited and insufficient, some states may not participate at all. It would also delay enactment of a workable and meaningful Medicare prescription drug benefit that could be more quickly implemented nationwide and more effectively cover low-income beneficiaries.

Pennsylvania has its own version of the Bush/Roth low-income plan. Called "PACE" (Pharmaceutical Assistance Contract for the Elderly), it seeks to assists eligible elderly Pennsylvania residents with the cost of their prescription medications. Eligible persons can obtain prescription medications, as well as, insulin and insulin needs and syringes from participating pharmacies at a cost of $6 per prescription.

You are eligible for PACE if you are single, over the age of 65 and your income last year was less than $14,000 and you are a resident of PA for at least 90 days prior to the date of application. For married couples over the age of 65, the maximum annual income, combined for both husband and wife, must be less than $17,200. The median income of a senior household in our district is $22,472; therefore many seniors in the Third Congressional district would not qualify for PACE.

In 1999, the Pennsylvania PACE program – the largest in the nation – served 50 percent fewer Medicare beneficiaries (217,103) than in 1998 (443,518). Although the Governor expanded the program in 1996 and aimed to cover an additional 75,000 seniors, fewer people were enrolled overall in 1999, and his new PACENET program has covered less than 20,000 since 1996.

While Congressman Borski hopes to see more enrollment in the PACE program over the next few years, he also hopes that the federal government will take notice of the state’s failure in providing only low-income seniors with prescription drugs. Congressman Borski believes that any new prescription drug benefit must be based in the Medicare program. He supports a comprehensive plan to provide a voluntary prescription drug benefit that is affordable for all seniors – a plan that ensures that all Medicare beneficiaries, no matter where they live or how sick they are, will pay the same affordable premiums; a plan that covers catastrophic drug costs; and a plan that is part of an overall effort to strengthen and modernize Medicare, so the government will not have to ask our children to shoulder the burden of the baby boom generation retirement.

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