NCPA - National Center for Policy Analysis


April 18, 2007

The Senate is scheduled to vote today on legislation to allow the government to negotiate drug prices under the 2003 Medicare prescription drug bill.  The Democrats claim this would save money for seniors and taxpayers, but the more likely result is that seniors would find that fewer of their therapies are covered, says the Wall Street Journal.

According to a new study by the Lewin Group, federal insurance programs that impose price controls typically hold down costs by refusing to cover some of the most routinely prescribed medicines for seniors.  These include treatments for high cholesterol, arthritis, heartburn and glaucoma.

The Lewin study examined the availability of the 300 drugs most commonly prescribed for seniors:

  • It found that one in three -- including such popular medicines as Lipitor, Crestor, Nexium and Celebrex -- are not covered under Veterans Health Administration, which negotiates prices directly with drug companies.
  • However, 94 percent are covered under the private competition model of Medicare Part D.
  • Fewer than one of five new drugs approved by the FDA since 2000 are available under VHA.

More importantly:

  • Statistics released March 22 by the VHA and Department of Health and Human Services show that 1.16 million seniors who are already enrolled in the VHA drug program have nonetheless signed up for Medicare Part D.
  • That's about one-third of the entire VHA case load.

Why?  These seniors have figured out that Medicare Part D offers more convenience, often lower prices, and better insurance coverage for their prescription drugs.  In short, seniors are voting with their feet against the very price control system that Democratic leaders Harry Reid and Nancy Pelosi want to push them into, says the Journal.

Source: Editorial, "Bitter Pills," Wall Street Journal, April 18, 2007; based upon: "Comparison of VA National Formulary and Formularies of the Highest Enrollment Plans in Medicare Part D and the Federal Employee Health Benefit Program," Lewin Group, January 12, 2007.

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