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Duckworth: Medicare Part "D"

Location: Lombard, IL

Duckworth: Medicare Part "D"

Duckworth: Medicare Part "D" means more Dollars for drug companies, "Donut" hole for seniors

While drug companies report huge profits this week, Congressional candidate Tammy Duckworth met today with area seniors who have had far less favorable experiences with the new Medicare Part D prescription drug program, including many who are currently experiencing a loss of coverage altogether due to the program's "donut hole."

Medicare Part D beneficiaries are responsible for all of their prescription drug costs between $2,250 and $5,100. This gap in coverage is commonly referred to as the "donut hole." Duckworth said that the source of the drug companies' recent windfall profits is the prohibition in the law that keeps the government from negotiating for lower prices.

In a letter sent yesterday to the Speaker of House, Dennis Hastert, Duckworth urged him to schedule a vote before adjournment this September to repeal the ban on Medicare's ability to negotiate for lower prices with drug companies, which could save taxpayers billions of dollars and help sustain the program.

"While I supported the extension of Medicare to cover prescription drug costs for seniors, the Bush Administration and this Congress made a huge mistake by barring Medicare from negotiating for lower prices from the drug companies," Duckworth said. "The drug industry lobbyists won, and taxpayers lost."

The Medicare law explicitly precludes the government from negotiating price breaks for millions of seniors. As a result, their prescription drugs will cost billions more than they should, providing a huge windfall for pharmaceutical companies that is being directly subsidized by the taxpayers.

It is estimated that the drug companies will realize a windfall of $2 billion or more this year, due to the increased prices they are able to charge under Medicare which will be passed along to the taxpayers.

Just this week, two major American drug makers, Merck and Schering-Plough, reported second-quarter profits that were well ahead of analysts' expectations. These fast-rising profits were attributed to the shift in prescriptions for 6.5 million low-income seniors from Medicaid to Medicare.

"The pharmaceutical industry is beginning to reap a windfall through the transfer of millions of low-income seniors from Medicaid into the new Medicare Part D drug program while seniors are left with huge out of pocket expenses because of the donut hole," Duckworth said.

Under Medicaid, states are able to use their purchasing power to leverage lower prices from the drug companies, a practice that is banned for the federal government under the Medicare prescription drug law. The prices paid by insurers for their medications are proving to be much higher than what the same drugs previously cost when paid for by the states under Medicaid.

"As someone who obtains my prescription drugs through the Veterans Administration, I know that the government's ability to negotiate for lower drug prices can provide taxpayers with very significant savings," she continued. "With the future health of the Medicare Trust Fund in serious question, I respectfully urge Speaker Hastert to schedule a vote this year to repeal the existing ban on Medicare's ability to negotiate for lower prices with the drug companies."

The VA routinely achieves discounts of 30 percent or more on many of the drugs it provides to veterans. Under the Medicaid program, these rebates have averaged about 15 percent off list prices. Some large states, such as New York and California, have received even larger rebates.

"We know from the successes we've seen with the Veterans Administration and state Medicaid programs that the government can effectively hold down prescription drug prices through the utilization of market forces. Congress ought to be extending those practices to the Medicare Part D program rather than passing laws that guarantee billions in windfall profits for the drug industry," said Duckworth.

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