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(HealthNewsDigest.com) – As talk in Washington continues to heat up over the debt ceiling and deficit-reduction proposals, you may be hearing an onslaught of information and opinion about Medicare’s drug program.
To separate the facts from fiction, the Center for Medicare Advocacy has outlined some common misconceptions about Part D and its contributions to our nation’s debt. Specifically, some stakeholders oppose requiring brand-name drug manufacturers to provide rebates to drug plans, currently required in the Medicaid program. Reinstating these rebates, which were previously provided prior to Part D enactment, would save taxpayers billions of dollars and lower costs. The Committee on Oversight and Reform confirmed that ending the rebate cost taxpayers $2.8 billion in 2007 alone.
Other myths include:
Myth: Competition among private plans in the Medicare Prescription Drug Program (Part D) program slowed increases in drug prices.
Truth: Drug and medication prices soared for the 9 million dually-eligible beneficiaries when Medicare Part D was enacted. The average retail cost of brand-name drugs for individuals with chronic conditions soared over 30% between 2005 and 2009 to $1,382. This increased cost is covered by Medicare and consequently U.S. taxpayers.
The Bottom Line: Reinstating rebates that existed prior to Part D will help curb costs that have been passed along from drug manufacturers and private plans to beneficiaries and taxpayers.
Myth: Reinstating drug rebates for dually eligible beneficiaries will result in higher drug prices for other Medicare beneficiaries who purchase drugs.
Truth: When the rebate was eliminated, the price of prescription drugs for non-dually eligible Medicare beneficiaries rose. In fact, costs for common drugs rose much higher than the average annual increase from 2006 through the first quarter of 2010.
The Bottom Line: Extending previously-existing rebates for duals would not directly result in price increases for other populations.
Myth: Reinstating drug rebates for duals will result in decreased investments in research and development from drug manufacturers.
Truth: When the rebates were eliminated, the rate of increase in investment in research and development slowed rather than accelerating. According to the Pharmaceutical Research and Manufacturers of America’s own calculation of their members’ research and development investment, that investment increased from 2000 to 2005 by $13.9 billion but from 2005 to 2009, the increase was only $5.9 billion. Moreover, researchers at NYU found that “despite their claim, brand-name drug manufacturers in the U.S. spent almost twice as much on promotion as they spent on research and development.”
The Bottom Line: Ending the rebate did not spur investment in research and development, and reinstating it would not directly stifle innovation as claimed.
Reinstating the drug rebates that were available to dually-eligible beneficiaries prior to the Medicare Modernization Act will save taxpayers billions of dollars and help curb costs for beneficiaries.
Policymakers must consider common-sense solutions to managing the nation’s debt, including restoring drug rebates for duals, which would save money for all taxpayers and Medicare.
The Center for Medicare Advocacy, Inc is a national non-profit, non-partisan organization that provides education, advocacy, and legal assistance to help elders and people with disabilities obtain Medicare and necessary health care. The Center was established in 1986. We focus on the needs of Medicare beneficiaries, people with chronic conditions, and those in need of long-term care. The organization is involved in writing, education, and advocacy activities of importance to Medicare beneficiaries nationwide. The Center’s central office is in Connecticut, with offices in Washington, DC and throughout the country.
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