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Statements on Introduced Bills and Joint Resolutions - S. 2766

Location: Washington, DC



S. 2766. A bill to amend part D of title XVIII of the Social Security Act to authorize the Secretary of Health and Human Services to negotiate for lower prices for Medicare prescription drugs and to eliminate the gap in coverage of Medicare prescription drug benefits, to reduce medical errors and increase the use of medical technology, to increase services in primary and preventive care by non-physician providers, and for other purposes; to the Committee on Finance.

Mr. SPECTER. Mr. President, I have sought recognition today to introduce the Prescription Drug and Health Improvement Act of 2004, which is legislation designed to reduce the high prices of prescription drugs. Americans, specifically senior citizens, pay the highest prices in the world for brand-name prescription drugs. With 43 million uninsured Americans and many more senior citizens without an adequate prescription drug benefit, filling a doctor's prescription is unaffordable for many people in this country. The United States has the greatest health care system in the world; however, too many seniors are forced to make difficult choices between life-sustaining prescription drugs and daily necessities.

The Centers for Medicare and Medicaid Services estimate that in 2003 per capita spending on prescription drugs rose approximately 12 percent, with a similar rate of growth expected for this year. Much of the increase in drug spending is due to higher utilization and the shift from older, lower cost drugs to newer, higher cost drugs. However, rapidly increasing drug prices are a critical component.

High drug prices, combined with the surging older population, are also taking a toll on State budgets and private sector health insurance benefits. Medicaid spending on prescription drugs increased at an average annual rate of nearly 20 percent between 1998 and 2001. Until lower priced drugs are available, pressures will continue to squeeze public programs at both the State and Federal level.

To address these problems, my legislation would reduce the high prices of prescription drugs to seniors by: one, allowing the Secretary of Health and Human Services, HHS, to negotiate prescription drug prices with manufacturers; and two, eliminate the coverage gap in the Medicare Prescription Drug Program. The bill's $400 billion price tag over the next 10 years would be offset by, three, reducing medical errors, increasing the use of medical technology, and, four, increasing the use of non-physician providers in primary and preventive health care.

Prescription Drug Negotiation: This legislation would repeal the prohibition against interference by the Secretary of HHS with negotiations between drug manufacturers, pharmacies, and prescription drug plan sponsors and instead authorize the Secretary to negotiate contracts with manufacturers of covered prescription drugs. It will allow the Secretary of HHS to use Medicare's large beneficiary population to leverage bargaining power to obtain lower prescription drug prices for Medicare beneficiaries.

Price negotiations between the Secretary of HHS and prescription drug manufacturers would be analogous to the ability of the Secretary of Veterans Affairs to negotiate prescription drug prices with manufacturers. This bargaining power enables veterans to receive prescription drugs at a significant cost savings.

In my capacity as chairman of the Veterans' Affairs Committee, I introduced the Veterans Prescription Drugs Assistance Act, S. 1153, which was reported out of committee on June 20, 2004.

This legislation would broaden the ability of veterans to access the Veterans Affairs Prescription Drug Program. All Medicare-eligible veterans will be able to purchase medications at a tremendous price reduction through the Veterans Affairs' Prescription Drug Program. In many cases this would save veterans who are Medicare beneficiaries up to 90 percent on the cost of commonly prescribed medications. Similar savings would be available to America's seniors from the savings achieved using the HHS bargaining power, like the Veterans Affairs bargaining power for the benefit of veterans.

Medicare Coverage Gap Elimination: The bill would eliminate the coverage gap, also known as the "doughnut hole," for beneficiaries in the Medicare prescription drug program. Beginning in January 2006, Medicare beneficiaries with an individual income of over $13,470 and couples with an income over $18,180, 150 percent of the poverty level, will pay a monthly premium, approximately $35, a $250 deductible, and coinsurance of 25 percent up to an initial coverage limit of $2,250, but then do not receive coverage until they exceed $5,100 of total spending. Specifically, Medicare beneficiaries will have to make out-of-pocket payments for prescription drug purchases from $2,250 to $5,100 in total spending. After $5,100 in total spending, the coinsurance payment for those beneficiaries is 5 percent. Medicare beneficiaries below 150 percent of the poverty level do not have a gap in drug coverage. My legislation would eliminate the gap in coverage for those over 150 percent of the poverty level in the Medicare prescription drug program, by extending the 25 percent beneficiary coinsurance payment from $2,250 to $5,100 in total spending.

This provision comes at an expected cost of $400 billion over 10 years, which will be paid for through savings from reducing medical errors, increasing the use of medical technology, and increasing the use of non-physician providers in primary and preventive health care.

Reducing Medical Errors and Increasing the Use of Medical Technology: The bill provides grants for demonstration programs to test best practices for reducing errors, testing the use of appropriate technologies to reduce medical errors, such as electronic medication systems, and research in geographically diverse locations to determine the causes of medical errors. The implementation of automated prescription drug dispensers will prevent adverse drug reactions, which in turn can cause further illness resulting in increased care needed to correct the error. The utilization of electronic records will reduce the incidence of repeat medical tests, which will result in significant cost savings.

On November 29, 1999, the Institute of Medicine, IOM, issued a report entitled "To Err is Human: Building a Safer Health System." The IOM report estimated that anywhere between 44,000 and 98,000 hospitalized Americans die each year due to avoidable medical mistakes. However, only a fraction of these deaths and injuries are due to negligence. Most errors are caused by system failures. The IOM issued a comprehensive set of recommendations, including the establishment of a nationwide, mandatory reporting system; incorporation of patient safety standards in regulatory and accreditation programs; and the development of a non-punitive "culture of safety" in health care organizations. The report called for a 50-percent reduction in medical errors over 5 years.

After the report was issued, I held a series of three Labor, Health and Human Services Appropriations Subcommittee hearings on medical errors: Dec. 13, 1999-to discuss the findings of the Institute of Medicine's report on medical errors; Jan. 25, 2000-a joint hearing with the Committee on Veterans' Affairs to discuss a national error reporting system and the VA's national patient safety program; Feb. 22, 2000-a joint hearing with the Health, Education, Labor and Pensions Committee to discuss the administration's strategy to reduce medical errors.

After hearing from Government witnesses and experts in the field on medical errors, I included $50 million in the fiscal year 2001 Senate Labor, Health and Human Services and Education for a patient safety initiative. In the Senate report, I also directed the Agency for Healthcare Research and Quality, AHRQ, to: one, develop guidelines on the collection of uniform error data; two, establish a competitive demonstration program to test "best practices"; and three, research ways to improve provider training.

The committee also directed AHRQ to prepare an interim report to Congress concerning the results of the demonstration program within 2 years of the beginning of the projects. The fiscal year 2002 Senate report directed AHRQ to submit a report detailing the results of its initiative to reduce medical errors. HHS combined both reports into one, which it submitted to me earlier this year.

Since fiscal year 2001, the Labor/HHS Subcommittee has included within the Agency for Healthcare Research and Quality funding for research into ways to reduce medical errors. The fiscal year 2002 appropriation was $55 million, in fiscal year 2003 another $55 million was provided, and in fiscal year 2004 the appropriation was increased to $79.5 million.

The bill seeks to assist development of private sector technology standards to reduce medical errors by examining information technology, providing grants, and coordinating implementation by private sector entities. This would help ensure that this Federal investment will help further the national health information infrastructure by sharing the information collected through these demonstration projects with other health facilities nationally. These efforts would help reduce medical errors and bring the Nation's health systems into the 21st century with a projected cost savings of $150 billion over 10 years.

Primary and Preventive Care Services: The bill includes provisions for the use of nonphysician providers such as nurse practitioners, physician assistants, and clinical nurse specialists by increasing direct reimbursement under Medicare and Medicaid without regard to the setting where services are provided. The services provided by non-physician providers would insure that patients would receive benefits and services to which they are entitled without compromising the high standards of medical care. The use of these health care professionals would provide a significant cost savings to health care systems.

The bill creates a medical student tutorial program providing grants to encourage students early on in their medical training to pursue a career in primary care and provides grant assistance to medical training programs to recruit such students. This program is advantageous for medical students by providing valuable primary care experience, while offering services at a lower cost to primary care facilities. The savings from this provision is estimated at $250 billion over a 10-year period.

I believe this bill can provide desperately needed access to inexpensive, effective prescription drugs for America's seniors. The time has come for concerted action in this arena. I urge my colleagues to move this legislation forward promptly.

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