- The Washington Times - Thursday, July 21, 2011

The battle over reducing Medicare’s cost for prescription drugs flared up on Capitol Hill on Thursday as lawmakers continued to debate deficit-reduction plans that could curb the program’s growth.

While Republicans have emphasized the successes of Medicare Part D in lowering drug costs, Democrats say drug prices are still higher here than in Europe.

Herb Kohl, Wisconsin Democrat and chairman of the Senate Committee on Aging, released a report saying the average price of pharmaceutical drugs in the United States is about 30 percent higher than in 33 other developed countries.

Mr. Kohl argued in favor of a longtime effort by Democrats to allow the government to “negotiate” with drug companies for lower prices.

“We already have prescription drug programs in place which cut costs through negotiation, … and we should look to emulate those examples,” Mr. Kohl said.

The parties are also divided over drug reimbursements for Americans who are eligible for both Medicare and Medicaid — known as dual-eligibles.

In recent debt-ceiling negotiations, Democrats proposed cutting costs by requiring pharmaceutical companies to extend rebates for drugs offered under Medicare Part D. The requirement is estimated to save $50 billion over 10 years.

Currently, drug companies must offer rebates for drugs covered under Medicaid, but not for drugs offered through Medicare Part D. Republicans have said extending the rebates to Part D would result in higher premiums.

Douglas Holtz-Eakin, former director of the Congressional Budget Office and president of the American Action Forum, released a study Thursday supporting GOP claims.

Rebates under Part D would increase prescription drug premiums anywhere from 19.6 percent to 39.4 percent, according to the study. The study also claimed that out-of-pocket drug costs would increase nationwide by $1.5 billion to $3.7 billion.

“The result of the proposal would be to raise premiums for America’s seniors and raise dramatically their out-of-pocket costs,” Mr. Holtz-Eakin said. “It makes no sense to incorporate into a successful program parts of the least-successful program.”

The debates over Medicare and Medicaid are framed by larger disputes raging in Washington, as lawmakers try to agree on a spending solution before the federal government hits its debt ceiling Aug. 2.

A “Gang of Six” plan to cut spending and raise the debt ceiling is the current focus of discussion. Lawmakers have said talks have included a Part D rebate for dual-eligibles, although the plan doesn’t call for it specifically.

“To my eye at least, this proposal is very much alive and I think it’s potentially dangerous,” Mr. Holtz-Eakin said.



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