November 6, 2006

Industry groups are criticizing a recent activist report on the state of the Medicare prescription drug plan as a ploy to get direct government negotiation of Medicare costs, a move they say will limit consumers' choices.

The Families USA report, "Coverage through the 'Doughnut Hole' Grows Scarcer in 2007," highlights alleged deficiencies in the Medicare prescription drug plan. According to the Nov. 1 report, more seniors will lack coverage under the program, also known as Part D, in 2007.

The number of seniors in the so-called doughnut hole where patients do not qualify for Medicare coverage is expected to grow from 375,000 in 2006 to 6.6 million in 2007, the group said. The cost of coverage for people in that group is expected to nearly double.

Drug costs for Medicare recipients 65 or older are partially covered by the program's Part D drug benefit. Once beneficiaries' prescription drug costs have reached $2,250, they become responsible for 100 percent of the costs. Part D coverage kicks back in after they have spent a total of $3,600 in out-of-pocket expenses.

The group argued that the report proves that Part D is not working. "This coverage gap never made sense, and now it is getting worse for seniors who take multiple prescription drugs," Ron Pollack, executive director of Families USA, said.

But industry groups, including PhRMA, are blasting the report as a ploy to get Congress to award the Centers for Medicare & Medicaid Services (CMS) the authority to negotiate Medicare drug costs. "Families USA wants the government to negotiate prices as a 'fix' for Medicare. Their argument ignores two crucial facts," Ken Johnson, the group's senior vice president, said.

"First, the success of the Medicare drug program relies on private sector competition to contain medicine costs. Second, in Canada, Australia or any place where governments set drug prices, patient choices vanish. Allowing the federal government to negotiate drug prices in this country would, according to experts, lead to restrictive formularies and patients who can't get some of the medicines their doctors prescribe."

The report is available at www.familiesusa.org/assets/pdfs/medicare-donut-hole-nov-2006.pdf (http://www.familiesusa.org/assets/pdfs/medicare-donut-hole-nov-2006.pdf).