PhRMA statement on the Medicare prescription drug program

Apr 5 2007

Pharmaceutical Research and Manufacturers of America Senior Vice President Ken Johnson issued the following statement on the AARP's campaign to modify the Medicare prescription drug program:

"AARP's misguided efforts to alter the Medicare prescription drug benefit continue despite overwhelming evidence that the program is working for seniors and taxpayers alike. Most troubling is that the policy changes the group seeks -- allowing Medicare to 'negotiate' drug prices -- threatens to do more harm than good for patients in need of potentially life-saving medicines.

"Medicare Part D's track record speaks for itself. For the first time ever, more than 90 percent of seniors and other beneficiaries have comprehensive prescription drug coverage. Seniors also are experiencing significant savings.

"According to the Centers for Medicare and Medicaid Services (CMS), seniors are saving on average $1,200 a year on their medicines. Seniors themselves report that their monthly out-of-pocket spending on medicines has dropped 54 percent since the program began, according to a poll by Public Opinion Strategies.

"Equally as important, seniors are satisfied with their drug coverage. In fact, some 80 percent of seniors are satisfied with their Medicare prescription drug coverage, according to several independent polls sponsored by organizations such as AARP, J.D. Power and Associates, the Medicare Rx Education Network, and Kaiser Family Foundation.

"Robust competition among Medicare drug plans continues to drive down costs for both seniors and taxpayers. According to CMS, average premiums are $22 a month -- 46 percent less than previously estimated.

"In addition, the non-partisan Congressional Budget Office (CBO) estimates Medicare Part D will cost 26 percent less over the next 10 years than earlier forecasts, meaning taxpayers will save $265 billion.

"Critics contend that there are no negotiations in how prices for medicines are set. That's simply not true. The negotiations are occurring between pharmacy benefit managers and Part D private plans on behalf of as many as 200 million people, not just the 43 million now in Medicare. That's the marketplace in action and that's how America's seniors will see true savings without compromising the search for future cures.

"The non-interference clause of the Medicare Act protects against the federal government limiting patients' access to medicines they need, without compromising affordability. Even the CBO has said that government interference 'would have a negligible effect on federal spending' and that the government probably could not negotiate lower costs than the powerful private sector purchasers already negotiating for lower costs.

"Many experts contend that the only way the government could effectively negotiate lower costs is to limit access. While we are committed to making the Medicare prescription drug benefit even better, we remain opposed to restrictive policies that would reduce access of medicines to patients in need and undermine the program's clear success."

The Pharmaceutical Research and Manufacturers of America (PhRMA) represents the country's leading pharmaceutical research and biotechnology companies, which are devoted to inventing medicines that allow patients to live longer, healthier, and more productive lives. PhRMA companies are leading the way in the search for new cures. PhRMA members alone invested an estimated $43 billion in 2006 in discovering and developing new medicines. Industry-wide research and investment reached a record $55.2 billion in 2006.