New drug plan's costs hurt needy
By Marc Siegel

My patient, John Elias, would benefit from a comprehensive Medicare prescription drug plan, if one were truly available. But while the new bill signed by President Bush on Monday is designed to bring new customers to the drug companies, it will do far more to maintain top-dollar prices than provide complete coverage. This is because government negotiations on prices are forbidden.

When Elias hears about the Medicare measure, with its high deductibles, co-pays and the possibility of $3,600 coming out of his pocket, he simply shakes his head. "Got any samples?" he asks me. Elias uses a wheelchair. He has diabetes and hypertension, and because he has no drug coverage, he relies on free samples. When I run out of his medicine for blood pressure, it soars out of control. His blood sweetens and unsweetens depending on whether I can offer him his diabetes pills.

This fall, the New York Public Interest Research Group published a survey of 100 pharmacies that revealed that the uninsured pay 100% more for prescription drugs on average than the government pays for use in its veterans hospitals and armed services. It's also 130% more than Canada pays. The problem is the uninsured have no one doing their negotiating. No one who can buy in bulk for them. The new plan forbids this and restricts cheaper drug re-imports from Canada without prior Food and Drug Administration approval. So the government will be paying more than it should for the drugs it covers, and patients will be paying more than they should for drugs not covered. Canada and other countries will continue to reap the rewards of our technology at a lower cost than we do. This is wrong.

Companies dictate prices

The great variance in prices demonstrates that drug companies can set them based on what a given market will bear. This policy limits access to crucial medications for people such as Elias.

Private insurers will be exempted from this price-negotiation ban, which may help accelerate their future consumption of traditional Medicare. The result may be better business, but not better health care. Private insurers already put a squeeze on pharmacists to make their profits on the uninsured. Joel Eichel, chief pharmacist at Bigelow in New York City, the nation's oldest freestanding apothecary, says, "Insurance companies allow us a few dollars per prescription. We must make our profits on cash customers."

Take, for example, Lipitor, a popular cholesterol-lowering drug. The federal government pays $41.12 for a month's supply of the 10-mg tablet. Eichel says pharmacies pay just under $60 for the same amount. But the cash customer pays $80.90, meaning the pharmacy makes a $20 profit.

N.Y. program is a model

Many of my elderly patients overcome the cash-for-pills hurdle by turning to New York's Elderly Pharmaceutical Insurance Coverage (EPIC) plan. The feds should have looked more closely at this plan. With EPIC, if a Medicare patient is able to show need and an insufficient income, there is only a small out-of-pocket annual fee for medications and a small co-pay. The rest is covered by the state. New York, in turn, is responsible for negotiating lower prices with the drug companies for its EPIC members.

For those not on EPIC, I am like Robin Hood with my drug samples. We need advocacy for the uninsured. Instead, the new Medicare bill will bring the drug companies easy access to a group that can't afford the current prices. About $400 billion of tax dollars will fuel the new partial coverage during the next decade.

For any plan to work, it must level the playing field. More privatization means more profit, not more health care. Only bulk bargaining can drive prices down. Advocates for the elderly and disabled should insist on it or else rebel. True Medicare reform means bargained savings extracted from inflated drug prices and spread to those who really need it.

Marc Siegel, M.D., is a clinical associate professor of medicine at New York University

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Copyright © 1990-2007 Marc K. Siegel, M.D.