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CATANIA CONDEMNS DRUG COMPANIES’ PROFITS AT EXPENSE OF CONSUMERS
On October 15, 2007, the Congressional Committee on Government Oversight and Reform, chaired by Rep. Henry A. Waxman (D-CA) released its oversight report of the federal Medicare Part D program, finding that the reliance on private insurers for the delivery of this critical health benefit is driving up health care costs while producing marginal savings on prescription drugs for seniors.
Touted by supporters as a way to save health care dollars, Medicare Part D shifted prescription drug coverage to the private sector in an effort to foster competition. Since its inception, however, state legislators have had concerns about the privatized design of this critical drug benefit, the coverage gap for seniors (the “donut hole”), the lack of price negotiation, and the lack of transparency and oversight of rebates. The Committee’s report confirmed that the reliance on private insurers is inefficient and drives up health care costs. “It is outrageous that over a billion dollars in rebates is going annually into the pockets of Part D insurers while senior citizens pay out of pocket 100% of their costs in the “donut hole” coverage gap, and a total of $15 billion is being wasted on unnecessary administrative costs” said Catania. “The report of the House Committee on Oversight and Government Reform confirms what we have believed all along: a national plan, administered by Medicare, charged with negotiating drug prices without the intrusion of the insurance or pharmaceutical industries, would deliver better benefits at a much lower cost.” The report estimates that taxpayers and Medicare Part D beneficiaries could have saved almost $15 billion in 2007 if administrative expenses in the program were reduced to the level achieved by traditional Medicare and drug prices were lowered to Medicaid levels. In addition, private plans receive $1 billion worth of rebates on drug purchases paid for out-of-pocket by seniors. Over $180 per beneficiary will go toward private insurer administrative expenses including profit. Medicare Part D will cost approximately $47 billion in 2007. Of that $47 billion, private plans in Part D will consume 9.8 percent of that budget in administrative costs compared to 1.7 percent for traditional, government run Medicare Parts A and B. Click here to read the report. |
