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Graham Prescription Drug Benefit Bill Reaches Senate Floor

July 19, 2002

On Thursday, July 18, Senator Bob Graham offered his legislation to add an affordable, comprehensive, universal prescription drug benefit to Medicare as an amendment to S.812, The Greater Access to Affordable Pharmecuticals Act. A vote on the Graham-Miller-Kennedy prescription drug proposal, S.2625, is expected on Tuesday, July 23rd. The following is a transcript of Senator Graham's remarks:

Mr. GRAHAM. Madam President, this amendment represents the essence of S. 2625, which currently, in addition to those who cosponsored this amendment, has 29 other colleagues' sponsorship.

This legislation is designed to provide to American seniors affordable, comprehensive, and reliable universal prescription drug coverage. This coverage will be available to 39 million older Americans and disabled citizens who are covered by Medicare--citizens who voluntarily elect to participate in this new Medicare benefit. More than 2,750,000 of those 39 million live in my State of Florida and, as have citizens across America, been waiting year after year after year for Congress to finally deliver on the commitment that we have made to modernize Medicare through the provision of a prescription drug benefit.

When I made remarks on this issue on Tuesday of this week, I based those remarks on six principles that I believe should be the touchstone for an affordable, comprehensive universal prescription drug benefit for senior Americans. Let me briefly reiterate those six principles.

First, we must modernize the Medicare Program. We must bring Medicare into the 21stcentury. In my judgment, the provision of a prescription drug benefit is the single most important reform of the Medicare Program that we can make. Why is this benefit so central? Because in the 37 years since the Medicare Program was created, the practice of medicine has been fundamentally altered by the use of prescription drugs.

Prescription drugs have improved the quality of people's lives. They have reduced long recovery periods, and they sometimes can even avoid surgeries and disabling illnesses, such as strokes and heart attacks.

We must convert Medicare from a program which, since its inception in 1965, has focused on sickness. If you are sick enough to go to the doctor or to the hospital, Medicare will pay 77 percent, on average, of your costs. But if you want to maintain the highest level of health, which generally involves screening, early intervention, and prescription drugs to monitor the condition, Medicare will pay nothing.

Medicare must be converted from a sickness program to a wellness program if it is to serve the needs of senior Americans in the 21st century. That is the first principle.

The second principle is that beneficiaries must be provided with a real benefit. To be successful, this program must attract a wide variety of beneficiaries.

The program will be voluntary, so it must attract enrollment with reasonable and reliable prices and a benefit that pays off from day one. In this manner, we will be able to attract all seniors, from those who today have high drug needs to those who are healthy but might be concerned that they, too, could be struck down with a heart attack or other disabling condition.

If we are able to have a program that will attract that broad range of elderly in terms of their current state of health, then we will have a program that will be actuarially solid for years to come.

Seniors must be able to understand the benefit they receive. The coverage should be consistent, and seniors should receive that coverage without any unexpected gaps or omissions. In other words, it should operate as much as possible as the employer-provided coverage which they had during their working years.

The third principle is that beneficiaries must have choice. All Americans deserve choice in how they receive their health care. We must offer choice in who delivers their prescription drugs, which is why we must assure that each region of the country has an adequate number of providers of the prescription drug benefit. This will encourage competition, helping to keep costs down for seniors, as well as the taxpayers of the Medicare Program, and assure a sustainable prescription drug benefit for this and future generations of America's seniors.

Principle No. 4 is we must use a delivery system upon which seniors can rely. It must be a tried-and-true system, not an untested scheme that will turn older Americans into laboratory animals upon which to be experimented. We want to model our delivery system on what private sector plans have used and with what seniors are familiar.

Principle No. 5 is the program must be affordable. The reality is the majority of seniors live on fixed incomes. In my State of Florida, where many people have the idea that all or most of the seniors live at a level of luxury, the median income of our 2,750,000 seniors is $13,982 a year, and 770,000 seniors in our State live on incomes below 150 percent of poverty.

These fixed-income seniors need a prescription drug benefit that has a low premium, that does not require a deductible, has reasonable copayments that are easy to calculate, and will avoid wide variations from month to month in their coverage.

Finally, principle No. 6 is we must have a fiscally prudent program. We must find that balance between giving seniors what they need, that balance between a realistic assessment of what prescription drug costs are likely to be over the next 10 years for our seniors, and, finally, the balance of what our overall Federal budget will allow.

The Graham-Miller-Kennedy-Corzine amendment meets these six criteria. As a result, it has the support of the major organizations that represent America's seniors, including AARP.

Madam President, what does our plan provide? Our plan will require of seniors who voluntarily elect to participate a $25 monthly premium to do so. There will be no deductible. There is an easy-to-understand copayment system, which is $10 per prescription for generic medication and $40 per brand name, medically necessary drug.

I will pause at this point and point out the connectedness of this plan and this structure of benefits to the underlying legislation we have been discussing throughout the week to make it easier for all Americans to gain access to generic drugs.

Our legislation has a strong incentive for the use of generic drugs by having the $10 copayment for generics, $40 for brand names. To the extent that more generics are available, which, of course, is the purpose of the underlying bill, we will reduce the cost of this program and make it even more affordable to senior Americans.

We set a maximum out-of-pocket expense of $4,000 per year. Above that, all of the senior's drug cost, including copayments, will be covered. This is the so-called catastrophic coverage.

Seniors with incomes below 135 percent of the poverty level will pay no premiums, and beneficiaries with incomes between 135 and 150 percent of poverty will pay reduced premiums. We want all senior Americans to be able to participate in this program.

Our plan uses the same delivery model that America's private insurance companies utilize. It happens to also be the same model used by the Federal Employees Health Benefits Plan, a plan that covers virtually everybody in this Chamber.

We use pharmacy benefit managers, or PBMs, to deliver and manage prescription drug benefits, just as they do in virtually every major private and public sector employee health insurance plan. PBMs are companies that negotiate with pharmaceutical companies to get discounted prices based on their volume purchase.

We would allow all seniors a choice of which PBM to join. This would give choice to seniors, and it would give them the opportunity to shop among the PBMs that are competing for their business so that they, the senior, can decide which PBM best meets their particular needs, including factors such as the availability of mail order delivery and access to local pharmacies.

PBMs would be accountable to the Medicare Program and to all taxpayers. They would be required to demonstrate their ability to keep costs down through effective purchasing practices and provide quality service in order to win and keep a Government contract.

CBO has given us an estimate of our plan today. CBO estimates that our plan through the year 2010 would cost $421 billion. Taking into account, in addition to the base cost, the benefits that would flow by the adoption of the underlying generic bill, that figure is reduced to $407 billion through the year 2010.

That date is important because part of our legislation is a required reauthorization by the Congress in 2010. In much the same way as we are now reauthorizing Welfare to Work after it has been in place for 6 years, we would require the reauthorization of this prescription drug benefit so we can take into account the experience we will have gained and make an assessment as to what kind of prescription drug benefit we want to carry into the future.

If the program is extended, then the 10-year cost of the plan through the year 2012 would be an additional $173 billion.

Because this prescription drug benefit would represent the largest expansion of the Medicare Program in its 37-year history, we believe it is important for Congress to review the program to see how well it is working and whether it has given seniors the coverage they need.

Madam President, our good friend and colleague from Utah has introduced legislation which has a similar objective to the one we are proposing; that is, to assure that seniors would have access to a comprehensive, universal, affordable prescription drug benefit.

I have comments to make about the plan which has been introduced. I will defer those comments, however, until Monday.

To conclude tonight, I want to say we are still hearing the background noise that all of this is theater, that there is no real commitment to passing a prescription drug benefit in the year 2002, as there was not in 2001, 2000, and on for the many years which seniors have been promised by different people seeking office that if elected they would deliver on a prescription drug benefit.

What we are committed to today--and I believe this feeling also carries to my good friend from Utah and those who have joined him in his legislation--is we are not interested in election year posturing. We want to actually accomplish a result. We want to be able to say to our senior Americans, we have turned the corner. No longer are you participating in a sickness program, but you are now participating in a program which has as its primary commitment assuring that all senior Americans can live in the highest state of good health.

Our Nation's seniors have waited too long for the help they need to purchase their prescription drugs. An unconscionable number of these people are forced every day to choose between filling a doctor's prescription for a needed medication and paying for other basic needs. These people are not numbers in a statistical database. They are not strangers. These people who have been waiting and waiting are our parents and our grandparents. They are our neighbors. They are the people we used to work with. They are our friends. They are the Americans of the great generation.

We now have a challenge, an opportunity, a responsibility to respond to this great need that they have of some assistance in paying for what has become the fastest growing segment of our health care costs--prescription drugs. If we do not act on the prescription drug benefit this year, I fear the American people will lose confidence in the Congress and our ability to make the tough choices necessary to address our country's priority domestic issues.

Certainly, I do not claim that our bill is perfect, but I do suggest that it is as good as our collective efforts have been able to make it at this point. I believe this amendment justifies the support of our colleagues, as it has already received the support of virtually every major organization which represents the interests of America's seniors.

So I look forward to a full discussion and debate in the best tradition of this great deliberative body. I hope at the end of that debate we not only will have a better understanding of the options before us, but we will have reached a conclusion that will command the votes of a sufficient number of Members of this Senate that we can tell our senior constituents we have heard their long call for assistance in paying the costs of increasingly expensive prescription drugs; that we understand the importance of that call, and that we are now responding to that call. That is the challenge and that is my hope of what will be the conclusion of this debate.

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