Generic Drug Report and Study Request

Floor Speech

Mr. NELSON. Madam President, today I wish to call attention to a report released by the Senate Special Committee on Aging, ``Medicare Part D Prescription Drug Benefit: Increasing Use and Access of Affordable Prescription Drugs.'' I have long been an advocate in the fight for affordable prescription drugs for our seniors--in fact, when this body was considering the legislation that created the Medicare Part D benefit, I voiced concerns that we did not go far enough to ensure that every senior had access to the lifesaving and life-sustaining treatments they need.

During the debate in the Senate on the Affordable Care Act, I fought to eliminate the so-called Medicare Part D doughnut hole because no senior should have their drug coverage disappear when they need it most. I believe that closing the prescription drug doughnut hole was one of the best things we did in the Affordable Care Act, and in my State alone seniors have saved more than $756 million on their drugs since the law was passed.

Over the past 2 years, the Aging Committee has held hearings, drafted legislation, solicited multiple reports from the Government Accountability Office, GAO, and the Department of Health and Human Services Office of the Inspector General, OIG, on selected topics, and met with industry and beneficiary stakeholders. I requested a study by the GAO on the Part D plan finder tool's accuracy of information on plans and drug pricing.

I chaired a hearing to commemorate the 10th anniversary of the creation of Medicare Part D. During that hearing, witnesses raised issues of specialty drug costs, coverage denial, and customer service issues. As a result, Senator Collins and I introduced the Part D Beneficiary Appeals Fairness Act, S. 1365, to give beneficiaries the right to appeal for a lower copayment for drugs on the specialty tier, the tier on which the most expensive drugs are. I have worked hard with my colleagues to rectify issues with the Medicare Part D appeals process when I learned that seniors were still having difficulty when coverage for needed medications was denied. I also requested a thorough review by the OIG into beneficiaries' access to generic drugs in Medicare Part D plans, the results of which are in the report submitted today, as well as a continued review of the differences in prices for drugs in the Medicaid Program as compared with the Medicare Program.

I will continue to improve the Medicare Part D Program, and that is why my colleagues and I issued this committee report to inform the full Senate on innovative ways to use the tools within the Part D program to better control drug costs for seniors and taxpayers.

This report is the culmination of 2 years of work by the Senate Special Committee on Aging to assess the status of the Part D program and recommend improvements.

One undeniable factor that keeps costs down in the Part D program is the use of generic drugs. Competition in the generic drug market translates into real savings for both taxpayers and beneficiaries. The Congressional Budget Office, CBO, estimated in 2010 that the use of generic drugs in the Part D program saved beneficiaries and taxpayers approximately $33 billion; approximately 72 percent--$24 billion--of those savings accrued to the Medicare program and 28 percent--$9 billion--went to beneficiaries. CBO estimates that such savings are shared by beneficiaries and the Part D program through a combination of lower copayments and lower premiums than would have been charged otherwise.

While the proportion of generic drug use has increased over time, certain high-cost beneficiary groups continue to miss savings. The committee's report finds four areas for improvement that should be addressed in order to continue to improve on value-based prescription drug use. These include:

Incentivizing and supporting plan sponsors to not only include generic drugs on plan formularies but also to proactively promote the maximum use of generic alternatives where appropriate. Currently, most plan sponsors offer a full array of generic alternatives, but they are not required to do so, leaving a small number of plan formularies that do not maximize generic offerings. In addition, there are no mechanisms that reward or incentivize plan sponsors that have undertaken successful strategies to further increase generics use. Encouraging value in Part D plans as much as possible will be increasingly important in coming years.

Finding ways to increase the adoption of generic drugs among beneficiaries that receive low income subsidy, LIS, benefits. Generally, insurance companies have been successful at encouraging enrollees to use generic alternatives when available in part because there are large differences in copays between brand and generic drugs. However, in the LIS population, these cost differences do not exist; their copays are set by statute. Innovative methods to improve use of generic drugs in this population, while still ensuring full access for this vulnerable population, must be explored.

Improving education among beneficiaries and health professionals. There continues to be a need to educate beneficiaries and health professionals on the efficacy of generic medications and incentivizing them to substitute brand-name drugs for generic drugs, when appropriate.

Maximizing program integrity efforts at pharmacies. In some situations,
questionable pharmacy billing practices could thwart efforts that have been made to incentivize generics. HHS OIG, GAO, and others have identified important program controls in the Part D program that could be improved.

While the report deals only with those levers in the Part D program that can be adjusted to incentivize the less-costly drug option where appropriate, it is undeniable that recent reports indicate certain situations where the price of a selected generic drug dramatically increases. This trend--and the factors that contribute to this disturbing trend--must be better understood. Generics have been critical to overall fiscal sustainability of the health care system, and we must understand and address volatility that results in inexplicable price spikes for patients and taxpayers. I believe this is a hugely complex and recent phenomenon but one that must be studied further. That is why today, in addition to releasing this important and timely report, I intend to request an investigation by the GAO into those factors that underlie the recent price increases of certain generic drugs.

It is my hope that these actions, taken together, are efforts that both sides can agree to and will inform us on the best way to move forward to achieve the maximum drug savings possible and provide better, more affordable care for our seniors in coming years.

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