Welch says drug prescription program needs an overhaul

By Louis Porter Vermont Press Bureau

MONTPELIER ?Çö A new report by his congressional committee demonstrates the need for major changes in the Medicare Part D prescription drug program for seniors, U.S. Rep. Peter Welch said Monday.

"It confirms what we know. The drug companies are ripping off the U.S. taxpayers and seniors," Welch said.

The report released Monday by the House Oversight and Government Reform Committee, of which Welch is a member, shows that the program could have saved a stunning $15 billion by two simple actions. It said the program could have saved the money by slashing the high administrative costs of the insurance companies in Part D and by negotiating price discounts from manufacturers as is done for poor people under the Medicaid program.

Currently, private insurance companies get a federal subsidy to administer the prescription drug plan, but their overhead costs are much greater than in traditional Medicare, lawmakers said in the report.

Nearly 100,000 Vermonters are eligible for the Medicare Part D drug program.

Supporters of the Part D program have pointed out that the program, which took effect in 2006, is better than the alternative without it.

It was right to extend prescription drug benefits to senior citizens, Welch said. But Welch and other Democrats said that a major mistake was made in preventing the federal government from negotiating bulk purchasing agreements that could have lowered costs. For instance, the U.S. Department of Veterans Affairs, which runs the health system for soldiers, can and does negotiate prices on prescription drugs, lowering their cost, Welch said.

Certain drugs cost the Veterans Health Administration a fraction of what they do under Medicare Part D, he said.

A bill Welch co-sponsored with other U.S. House members, H.R. 4, would allow the government to negotiate price discounts. That bill is now in the U.S. Senate.

Supporters of the current Medicare Part D program sometimes argue it would amount to government price fixing on those medicines.

But Welch said the program would still be managed by private companies and allow physician and medicine choice by patients.

"We are letting ideology get in the way of responsible stewardship of taxpayer dollars," he said.

The industry organization that represents drug manufacturers, Pharmaceutical Research and Manufacturers of America, or PhRMA, disputed the findings in the congressional report.

"The Medicare prescription drug benefit is providing significant savings to millions of seniors and disabled Americans, while preserving access to a broad choice of medicines," Senior vice president of PhRMA Ken Johnson said in a statement on the report. "Premiums are 40 percent lower than originally projected, the cost per person for delivering the benefit that is reflected in plans' bids to the government is actually lower today than it was two years ago."

The report by the committee was the first independent review of the program, gaining access to some proprietary cost and pricing data from the private insurance companies that administer it.

This year the companies made $1 billion in profit, and did not negotiate significant rebates from manufacturers, according to the study. Drug prices in the program were reduced by a little over 8 percent, while the Medicaid program lowers those costs by 26 percent, according to Welch.

The program also leaves beneficiaries vulnerable to price fluctuations, according to the report.

Welch said the federal government should follow Vermont's lead and allow price negotiation on behalf of the beneficiaries of the program.

"We were able to overcome the opposition in the House. Now we have to do so in the Senate and with the president," Welch said.

Contact Louis Porter at louis.porter@rutlandherald.com