Copyright 2002 The San Diego Union-Tribune  
The San Diego Union-Tribune
July 19, 2002, Friday
SECTION: OPINION;Pg. B-9

LENGTH: 796 words

HEADLINE: Some bad options for drug coverage

BYLINE: Joseph R. Antos and Grace-Marie Turner; Antos is a resident scholar at the American Enterprise Institute in Washington (www.aei.org), specializing in Medicare and prescription drug issues. Turner is president of the Galen Institute (www.galen.org) in Alexandria, Va.

BODY:
The Senate expects to spend the rest of July debating bills designed to lower the cost of prescription drugs and provide a drug benefit to seniors. Virtually all of these bills would be dangerous to your health.

One proposal would allow drugs to be re-imported from Canada and other countries in order to piggyback on price controls they impose. But both the Clinton and Bush administrations concluded that re-importation is unworkable, poses a serious threat to public health, and will not result in significant price savings.

Re-imported drugs could be contaminated, expired, counterfeit or substandard in other ways, and middlemen likely would pocket most of the savings. Further, the U.S. government can't possibly monitor every shipment to detect contraband or even biochemical weapons.

Another proposal is to get cheap generic drugs to consumers faster by shortening drug patent protection. But confusion reigned in a Senate committee that was working on the bill.

Sen. Tim Hutchinson, R-Ark., reflected his and his colleagues' befuddlement in saying, "I don't think we fully know the implications" of the changes the committee is making to patent protection. That protection is the cornerstone for research and development of new drugs.

Perhaps the worst proposal is a bloated prescription drug benefit for Medicare designed by Sens. Bob Graham, D-Fla., and Zell Miller, D-Ga. -- a benefit designed to end in 2010.

The proposal seems simple: For a modest premium, seniors could purchase generic drugs for $10, brand names for $40, and "non-preferred" brands for $60. But the resulting system would breed inefficiency and waste, and could drive the price of prescription drugs to new heights.

There would be little incentive for the benefit administrators to drive a hard bargain for discounts from pharmaceutical manufacturers since the government would pay them dollar for dollar for the costs of the drugs.

The proposal might even offer an incentive for higher drug prices. Every dollar saved by the administrator would reduce the government payment by a dollar, and would not add any profit or market share.

The Graham-Miller bill would likely cost taxpayers about $650 billion without the 2010 sunset provision, making it the largest expansion in Medicare's history.

Price controls and burdensome regulation are virtually inevitable if -- or, when -- Medicare's prescription drug costs spiral even higher under the Graham-Miller bill.

Congress was faced with just such a cost spiral 20 years ago. It established a fee schedule that sets prices for 7,000 individual physician services in nearly 100 local markets. It issued thousands of pages of directives to doctors to regulate what they do and how they do it.

Yet Medicare's costs continue to rise, and many seniors are having difficulty finding a doctor willing to see them. Using this failed model in a bankrupt system for the drug benefit would be a serious mistake.

There is a better way. President Bush and some leaders in Congress have called for modernizing Medicare, adding a prescription drug benefit, and introducing meaningful choice to seniors. A new drug benefit must include elements of this broader reform or it will endanger the financial stability of Medicare.

An innovative proposal called the Prescription Drug Security Card plan offers meaningful drug coverage to seniors most in need while promoting efficiency, innovation and consumer choice. It also provides a way of testing market-based reforms that are key to Medicare's long-term survival.

The PDS plan combines a drug discount card with a cash subsidy for low-income people, a tax-deferred saving option for others, and catastrophic insurance protection.

Low-income seniors without drug coverage would get $600 a year from the federal government to help them with routine drug purchases and could roll over any balance to the next year, when another deposit would be made.

All seniors enrolling in the program would be protected by catastrophic coverage that starts when their drug spending hits $2,000.

Seniors would be able to choose from among competing, private plans that would track their card balances, negotiate discounts on their behalf, organize the catastrophic coverage, and provide other services to improve patient safety. Price controls and over-regulation would be replaced with flexibility and a consumer focus.

The PDS plan would allow Congress to focus on seniors who lack drug coverage and not disrupt the good coverage that millions of others have now. This plan also would allow seniors and their doctors to decide what drugs are best for them, and would actually put in place a foundation for changes that could save Medicare in the long run.



LOAD-DATE: July 21, 2002