Dear Speaker Boehner:
As Congress considers various options for reducing our nation's debt, we write to express our strong support for allowing the Secretary of Health and Human Services to negotiate prescription drug prices for plans offered under Medicare Part D. This important reform will yield significant cost savings for both the federal government and our seniors, while also strengthening Medicare for current and future beneficiaries.
Since the enactment of the Medicare Modernization Act, which created the Medicare Part D program, the federal government has been prohibited from directly negotiating with pharmaceutical companies for lower prescription drug prices for the 28 million seniors who participate in Medicare Part D. According to a 2008 report by the House Committee on Oversight and Government Reform, the federal government could save $156 billion over ten years by requiring the Secretary of HHS to enter into negotiations on Medicare Part D drug prices. Moreover, Medicare beneficiaries could save up to $27 billion over the same period of time.
There are numerous examples of how the Part D program is forcing taxpayers, seniors, and individuals with disabilities to pay more than they should for prescription drugs. For example, beneficiaries who are eligible for coverage under both Medicaid and Medicare, commonly referred to as dual eligibles, are required to obtain prescription drug coverage through Medicare Part D even though current law allows Medicaid to set limits on the amount the program will pay for prescription drugs, which has produced significant savings. In fact, the House Committee on Oversight and Government Reform study found that the cost of providing the top 100 drugs to dual eligibles was 30 percent higher under Medicare than it would have been under Medicaid. In addition, the independent Congressional Budget Office estimated that requiring manufacturers to pay Medicaid-level rebates for low-income Medicare beneficiaries would reduce Part D costs by $112 billion over ten years. While the administration of Medicare Part D has been a lost opportunity for cost savings thus far, allowing the Secretary of Health and Human Services to pay for the prescription drugs of dual eligibles as she does for Medicaid beneficiaries would lead to significant deficit reduction in the future without sacrificing seniors' benefits.
We have the opportunity to dramatically curb the costs, and at a time of tough budgets, for both families and the government, we simply cannot afford to leave these real savings on the table. We strongly encourage you to include this reform in any proposal to reduce the national debt.
Maurice D. Hinchey