prescription drugs

The government's administrative expense to run the Medicare program accounts for only 3% of Medicare spending. By contrast, the amount of every premium dollar retained by private insurance companies for marketing, administration and profit is 14%. The CBO has projected that the marketing and the profits of the insurance industry would add $38 billion in costs in the first seven years of the program compared to a benefit that was administered through Medicare.

Question to ask: "Why was Part D designed to hit seniors and taxpayers with such high and unnecessary administrative costs?

The 1,300 drugs on the Veterans Administration formulary account for the vast majority of prescriptions that are filled by people on Medicare - and Veterans can still get the drugs not on the VA formulary. They just need to have their doctor explain why they need the drug in question.

Additionally, no plans in the Medicare program cover all 4,300 FDA approved drugs. These plans have preferred drugs as well, which is why the typical beneficiary had to spend 8 hours last year sifting through the various options, according to a study done for the Medicare Payments Advisory Commission. Seniors with many drug needs presumably spent even more time.

Question to ask: Why has the VA received significantly higher marks than private health care in independent surveys of customer satisfaction for the past 7 years?

The total size of the private sector doesn't matter. It does not negotiate with drug companies as a sector—which is why we need Medicare to do it. The thousands of different private insurance plans that negotiate individually are far less effective than Medicare could be.

Also important is that Medicare-covered elderly have higher prescription drug use. For example, people 75 years of age and older take an average of 7.9 prescribed drugs per person per day.

Question to ask: If Medicare can't negotiate for lower drug prices as well as the private plans, why is the prescription drug lobby spending so much money fighting against allowing Medicare to do just that?

The largest U.S.-based drug companies spent more than twice as much on marketing, advertising, and administration as they spent on R&D (32% percent versus 13.9% of revenues), and they retained more in profits than they spent on R&D (17.4% versus 13.9%).

Question to as: Doesn't this directly contradict their other claims that negotiating for lower prices will be ineffective?

The costs are lower than expected mainly because millions of expected enrollees have decided that the Medicare drug program is not a good deal and haven't signed up - giving more reason to fix Part D and make it simpler and cheaper.

Question to ask: If the costs are already so low, why is PhRMA spending so much money fighting this proposal?

It is important to realize that this includes all the workers who get retiree health benefits and all the Medicare beneficiaries who get supplemental insurance. These plans receive subsidies through Part D and therefore their beneficiaries are counted as being enrolled in the program. There has been no mass rejection of the VA system, these veterans simply have been categorized as being covered by Part D.

Question to ask: Why has the VA received significantly higher marks than private health care in independent surveys of customer satisfaction for the past 7 years?

85% of American adults favor allowing the federal government to use its buying power to negotiate with drug companies to try to get a lower price for Medicare prescription drugs.

76% of American adults favor Allowing seniors the choice of obtaining their prescription drug plan directly from Medicare - instead of from a private insurance company.

Question to ask: Wouldn't seniors be more satisfied with lower drug prices? And why not save taxpayer money?

The top 20 drugs prescribed to seniors are on average 58% cheaper under the Veterans Administration, which uses its bulk purchasing power to negotiate for lower drug prices, than under the 5 largest Part D service providers.

Question to ask: If Medicare can't negotiate as well as the private plans, why is PhRMA spending so much money fighting this proposal?