Consumer advocates and some lawmakers are promoting a new bill they say would save Medicare $141 billion over the next decade by requiring prescription drug rebates for Medicaid-Medicare eligible patients and low-income Medicare beneficiaries.
The Medicare Drug Savings Act of 2013 would make drug companies provide rebates to the federal government for prescription medications used by dual eligible and some low-income Medicare patients. It would basically reinstate the prevailing policy prior to the creation of Medicare Part D in 2006, said Senate sponsor Jay Rockefeller, a Democrat from West Virginia.
"For years, drug companies have received a taxpayer-funded windfall on their prescription drugs for people eligible for both Medicare and Medicaid," Rockefeller said in a statement. "This bill would make sure drug companies no longer receive this unnecessary and excessive payment. It would responsibly help to reduce the deficit – without impacting Medicare beneficiaries."
The idea for the rebates has been proposed before and has typically been fractious. Matthew Bennett, senior VP at the trade group Pharmaceutical Research and Manufacturers of America (PhRMA), called the bill a "recycling of a flawed policy proposal: imposing mandatory government price controls in Medicare Part D, cleverly disguised as 'rebates.'"
Rockefeller and the 19 Senate co-sponsors, all of them Democrats and Independents, argue that since Medicaid and private insurers negotiate prescription drug prices, Medicare should too, at least for low-income beneficiaries.
The rebates, Rockefeller said, would "correct excessive payments" that stem from Medicare Part D policy, and save both patients and taxpayers money. Bennet, of the PhRMA trade group, argued that the price negotiations would really just benefit the government, "sending 'rebates' to the Federal Treasury, not seniors."
Surveys, meanwhile, have found support for lower-drug prices in Medicare. A national survey published in January by the Kaiser Family Foundation and the Robert Wood Johnson Foundation found 85 percent of respondents favor requiring drug companies to offer the federal government more affordable prices on medications for low-income people on Medicare.
Several dozen consumer groups, unions and trade groups are pushing for the bill, including the AARP, the AFL-CIO and the Consumers Union.
Joe Baker, president of the Medicare Rights Center, another group lobbying for the bill, said it "allows Medicare to secure reasonable drug prices, making the Medicare program more efficient without shifting costs to people with Medicare, half of whom live on annual incomes of $22,500 or less."
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VA formularies could save Medicare $14 billion a year, study finds