Lowering Drug Costs for the Elderly through a Medicare Prescription Drug Benefit

Jan. 26, 2000

Statement of Dr. Sidney Wolfe, Director of Public Citizen’s Health Research Group, on Lowering Drug Costs for the Elderly through a Medicare Prescription Drug Benefit

        There are two extremely embarrassing aspects of our health care system which cry out for action by the Congress and the president. We are the only developed country without national health insurance, and, clearly related to this, prescription drug costs are approximately twice here as the average of other developed countries. Although other countries have been able to reduce prescription drug costs to their current levels in large part because of the negotiating power of governments, which assure health insurance for all, it appears that before Americans finally join the league of civilized nations with universal coverage, there will be a successful legislative effort to lower drug prices for the elderly. The less complex mechanism is legislation to allow Medicare patients to purchase drugs which have been obtained via the low prices of the Federal Supply Schedule. Better, but more complicated and expensive to the federal budget, is a Medicare drug benefit which would only be feasible with purchases made at low negotiated costs. The election of 2000 will be fought, in part, over these prescription drug availability issues.

        It is clear that we consider those people in the military whose prescription drugs cost are covered by the Department of Defense and those veterans covered by the Veterans Administration to be too important to leave to the sharks of the pharmaceutical marketplace, and the government therefore uses its purchasing power to negotiate lower prices. Why are we not providing better for our 40 million older Americans who worked to get Medicare benefits, millions of whom cannot afford to pay all of the out-of -pocket costs for prescription drugs? The purchasing power of such a large group of people, larger that the population of many European countries, needs to be harnessed with government-negotiated deep price discounts, much like those obtained under the Federal Supply Schedule.

        It is certain that the lack of controls on prescription drug prices and the impaired access to such drugs is doing much harm — in the form of deaths and needless worsening of the medical condition — to older people. The scheming notion — taking the form of threats from the drug industry — that significantly controlling prices will cause harm because it will interrupt the flow of important new medicines for patients needs to be uncovered for the emptiness of its claim.