Studies | Health

No. 239
Thursday, November 30, 2000
by Robert Goldberg

Table of Contents

1. Executive Summary
2. Introduction
3. Structure of the Two Approaches
4. Key Differences in the Proposals
5. Drug Subsidies and Drug Costs
6. Options for Controlling Rising Drug Costs
7. The Candidates and Cost Containment
8. Conclusions
9. Notes
10. About the Author

Notes

1. See "Building A Better Medicare For Today And Tomorrow," National Bipartisan Commission on the Future of Medicare, Final Version, March 16, 1999, available at http://medicare.commission.gov/medicare/bbmtt31599.html.
2. Medicare Part A covers hospitalization and Part B covers physician and other non-hospital costs. There is no Part C.
3. Mark E. Litow, "Defined Contributions as an Option in Medicare," National Center for Policy Analysis, Policy Report No. 231, February 2000.
4. Alan B. Krueger, "The Model Doesn't Quite Fit Medicare Drug Insurance," New York Times, October 12, 2000, p. C2.
5. "Medicare Current Beneficiary Survey Cost and Use File, 1996," Information and Methods Group, Office of Strategic Planning, Health Care Financing Administration.
6. Robert W. Dubois et al., "Explaining Drug Spending Trends: Does Perception Match Reality?" Health Affairs, Vol. 19, No. 2, March 2000.
7. Ibid.
8. S.D. Horn et al., "Formulary Limitations and the Elderly: Results from the Managed Care Outcomes Project," American Journal of Managed Care, Vol. 4, No. 8, August 1998, pp. 1105-35.
9. Debi Reissman, "Issues in Drug Benefit Management: It's Not Always Best to Follow California Trends," Drug Benefit Trends , Vol. 12, No. 6, 2000, pp.27-28.
10. "Pharmacy Benefit Managers: FEHBP Plans Satisfied with Savings and Services, but Retail Pharmacies Have Concerns," U.S. General Accounting Office, Letter Report, February 21, 1997, GAO/HEHS-97-47.
11. Veterans Affairs National Formulary Section.
12. R. E. Small et al., "Evaluation of the total cost of treating elderly hypertensive patients with ACE inhibitors: a comparison of older and newer agents," Pharmacotherapy, Vol. 17,No. 5, Sept-Oct 1997, pp. 1011-16.
13. L. I. Condra et al., "Assessment of patient satisfaction with a formulary switch from omeprazole to lansoprazole in gastroesophageal reflux disease maintenance therapy," American Journal of Managed Care, Vol. 5, No. 5, May 1999, pp. 631-38.
14. Ibid.
15. "Older Americans 2000: Key Indicators of Well-Being," Federal Interagency Forum on Aging-Related Statistics,
16. Frank Lichtenberg, "Pharmaceutical Innovation, Mortality Reduction and Economic Growth, National Bureau of Economic Research, NBER Working Paper W6569, May 1998.
17. Because of the rapid growth in the elderly population, the number of older Americans with chronic disabilities increased by about 600,000, from 6.4 million in 1982 to 7 million in 1994.
18. Statement of Laura A. Dummit, Associate Director Health Financing and Public Health Issues Health, Education, and Human Services Division Medicare: Considerations for Adding a Prescription Drug Benefit (Testimony, 06/23/99, GAO/T-HEHS-99-153).
19. "Pharmacy Benefit Managers: FEHBP Plans Satisfied with Savings and Services, but Retail Pharmacies Have Concerns."
20. See, for example, testimony by Jeff Sanders, Senior Vice President, PCS Health Systems, Inc.; Scottsdale, Ariz., Hearing on Considerations for a Medicare Prescription Drug Benefit, Senate Committee On Finance, June 23, 1999.
21. J.D. Kleinke, "Just What the HMO Ordered: The Paradox of Increasing Drug Costs." Health Affairs, Vol. 19, No. 2, March/April 2000.
22. Frank Lichtenberg, "The Effect of Pharmaceutical Utilization and Innovation on Hospitalization and Mortality," National Bureau of Economic Research, NBER Working Paper W5418, January 1996.
23. Kleinke, "Just What the HMO Ordered: The Paradox of Increasing Drug Costs."
24. Ibid.

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