PhRMA Statement on HR 4

WASHINGTON, January 12, 2007 — Pharmaceutical Research and Manufacturers of America President and CEO Billy Tauzin issued the following statement today on the Medicare legislation passed by the House of Representatives:

“This debate is really about patient choice.  While we are committed to making the Medicare prescription drug benefit even better, we remain strongly opposed to restrictive policies such as price controls that would limit the choice of medicines available to tens of millions of seniors and disabled Americans and undermine the program’s early success.

“Contrary to what critics say, the Medicare prescription drug program is working. Just a few years ago, barely half of America’s seniors had comprehensive prescription drug coverage. Today more than 90 percent of them do. As a result, millions of older and disabled Americans now have peace of mind thanks to Medicare’s new prescription drug benefit.

“The Medicare drug program is just a year old, but it’s already making a meaningful difference in patients’ lives. Seniors and disabled Americans are seeing real savings on their prescription medicines, and they are able to select from a wide range of plans rather than a one-size-fits-all program. Patients choose the plan that best meets their needs -- often a plan with low premiums, no deductibles, and broad choices of medicines and pharmacies. Most importantly, seniors are now getting the medicines they need for the care they deserve.

“They are saving money, too -- an average of $1,200 a year on their prescription medicines. In addition, premiums are much lower than initially projected as a result of competitive bids by health care plans. Earlier this week, the Department of Health and Human Services (HHS) reported that average monthly premiums will be approximately $22 this year, if enrollees remain in their current plans, down from $23 in 2006 and significantly lower than the $37 initially estimated for the first year of the program.

“Not surprisingly, patients have expressed widespread satisfaction with their drug coverage. Multiple independent surveys from organizations such as J.D. Power, the Kaiser Family Foundation, the Wall Street Journal and the Medicare Rx Education Network show that nearly eight in 10 seniors are satisfied with their Part D prescription drug plan today.

“Because the federal government currently does not limit access to prescription drugs under Medicare, seniors can choose from among many plans that cover an average of over 4,300 medicines, compared to only 1,400 medicines covered in a restricted system such as the government-run VA program.  The House-passed bill would begin to change that, leading to a system that could put government in charge of the process of choosing covered medicines, rather than patients and their doctors.  The result would be limited access to the medicines seniors need and deserve.  That should not be acceptable to anyone.

“Market competition and lower bids by plans continue to dramatically lower the cost of the program for taxpayers as well. The estimated net cost of Medicare Part D over 10 years is now 30 percent less -- or $189 billion -- than originally projected when the program was created in 2003, according to HHS.

“Just in the last six months, the projected 10-year cost of the program has plummeted. Compared to estimates generated last summer, the CMS actuary now expects payments to Part D plans to decrease by $113 billion over the next 10 years. Importantly, $96 billion of the reduction is a ‘direct result of competition and significantly lower Part D bids,’ HHS said.

“In fact, the Congressional Budget Office this week estimated that H.R. 4 ‘would have a negligible effect on federal spending’ because ‘the Secretary would be unable to negotiate prices across the broad range of covered Part D drugs that are more favorable than those obtained by PDPs [prescription drug plans] under current law.’

“The numbers do not lie. Critics contend there are no negotiations in how prices for medicines are set, but that’s simply not true. The negotiations are occurring -- as they should be -- between the wide range of prescription drug plans that negotiate on behalf of millions of Americans and America’s pharmaceutical companies. For example, the three largest pharmacy benefit managers (PBMs) alone are using the power of the marketplace to aggressively negotiate medicine prices on behalf of more than 190 million Americans -- five times the number of Medicare beneficiaries.

“According to CMS, average Part D savings from rebates, discounts and utilization management have increased from the projected15 percent to 27 percent due to private-sector competition. That’s the marketplace in action and that’s how America’s seniors will see true savings without compromising access to today’s life-saving medicines or the search for future cures.

“The new Medicare prescription drug benefit is working very well. We need to slow down, work together, and find practical ways to make the program even better for all older and disabled Americans.”

The Pharmaceutical Research and Manufacturers of America (PhRMA) represents the country’s leading pharmaceutical research and biotechnology companies, which are devoted to inventing medicines that allow patients to live longer, healthier, and more productive lives.  PhRMA companies are leading the way in the search for new cures. PhRMA members alone invested an estimated $39.4 billion in 2005 in discovering and developing new medicines. Industry-wide research and investment reached a record $51.3 billion in 2005.

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PhRMA Internet Address:  http://www.phrma.org/">http://www.phrma.org

For information on how innovative medicines save lives, visit: http://www.innovation.org/">http://www.innovation.org

For information on the Partnership for Prescription Assistance, visit: http://www.pparx.org/">http://www.pparx.org

For information on the danger of imported drugs, visit: http://www.buysafedrugs.info/">http://www.buysafedrugs.info

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