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Feb 02, 2005

CONTACT: Jerry Flanagan (310) 392-0522 ext. 319

What's Missing from State of the Union: Medicare Fix

New legislation introduced yesterday by U.S Senators Ron Wyden (D-Ore) and John McCain (R-Ariz.) provides an "antidote to drug company profiteering allowed under President Bush's Medicare drug plan," according to the Foundation for Taxpayer and Consumer Rights (FTCR).

The new bill allows the 41 million member Medicare program to negotiate discounts with prescription drug manufacturers as private insurers and big businesses commonly do, something that President Bush and Congress opposed under pressure from drug companies. Drug companies employed 750 lobbyists in Washington D.C. during the time the Medicare drug law was being crafted, and gave $1 million in campaign contributions to President Bush and $16 million to members of Congress.

Market analysts have concluded that recent spikes in drug prices are in anticipation of the Medicare drug benefit to begin in full in 2006.

The new legislation repeals Section 1860D-11(I) of the Medicare prescription drug benefit, which prohibits Medicare from negotiating for lower-cost drugs in bulk. The legislation also requires "fall-back" plans designed to give more choice to seniors who live in areas with limited coverage options.

Additionally, the legislation requires:

* the Government Accountability Office (GAO) to track ongoing changes in drug prices. This step is essential to ensure that drug companies do not arbitrarily increase prices as the Medicare drug benefit takes effect.

* GAO to compare drug prices negotiated by the U.S. Department of Veterans Affairs against privately run systems, providing critical information on whether the government or private plans negotiate for the best prescription drug prices. The 39 million-member U.S. Department of Veterans Affairs negotiates bulk discounts of 70% and more on prescriptions.

The bipartisan bill was cosponsored by Russell Feingold (D-Wisc.), and Dianne Feinstein (D-Calif.).

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The Foundation for Taxpayer and Consumer Rights is a nonprofit and nonpartisan consumer advocacy organization. For more information visit us on the web at