Raise your Voice Letters Medicare Drug Benefit – A Terrible Mistake The Medicare prescription drug bill voted on by Congress in November 2003 was a terrible mistake that will dearly cost our children and grandchildren. This was not a Medicare reform bill. This was barely a Medicare prescription drug bill. This is a bill for politicians and special interest groups buying favor with the AARP. Consider: Expense: This bill will clearly exceed the original $400 billion price tag. In a typically congressional version of compromise, the conference committee report incorporates the most expensive aspects of both the House and Senate bills. This is a program that already faces unfunded liabilities of more than $33 trillion. The conference report is the political equivalent of cramming more passengers on the Titanic. No Reform: Any attempt to actually reform Medicare has been stripped out of this bill or so watered down as to be unrecognizable. Proposals to give seniors more choices and add elements of market-based competition to the program have been reduced to a tiny pilot project. The program doesn’t even start until 2010. Even highly touted proposals for health savings accounts have been weakened with restrictions and limitations that will severely limit the number of people who can take advantage of them. No Cost Control: Attempts to cap the bill’s cost have likewise been diluted. Instead of a hard cap, there is a vague call for future Congresses to consider changes if costs become too high. Unnecessary: Despite promises of political campaigns past, a prescription drug benefit was never Medicare’s most pressing need. Most American seniors already have prescription drug coverage through their Medigap policies. More than 70% of Medicare beneficiaries spent less than $500 from their own pockets for prescriptions last year. A small, targeted prescription drug benefit aimed at the small number of low-income seniors with high drug costs might have made sense. But there is no need for the biggest new entitlement program since the Great Society. Short-term political advantage is not worth the cost to future generations. Sometimes the better part of valor is recognizing when you have made a mistake. Congress should recognize that this bill is a mistake and go back to the drawing board. Michael Tanner Director of health and welfare studies The Cato Institute Innovation must be sustained Preferred-provider lists create unfair advantages for established service providers; more importantly, they create long-term disadvantages for pharmaceutical companies. In the last few years, businesses have seen an increased demand for fiscal responsibility. When viewed in financial statements, the preferred analytics of the drivers of this trend, the use of these lists can create efficiencies from the direct comparison of vendors on the quality, cost, and logistics of service. This strategy does make sense on a balance sheet, but we must also be aware of its consequences. From an innovation point of view, it is short-sighted. Branded pharmaceutical companies compete on differentiation, as emphasized by the millions of dollars spent every year on patent litigation. If we are constantly trying to educate healthcare practitioners and the public on new and different treatment methods, then we too should be open to emerging business approaches. Preferred-provider lists put vendors into boxes that are biased by the clients’ preconceived guidelines. For companies that compete on cost such as Wal-Mart and 7-11, this is an effective strategy; but, it is not effective for companies that rely on R&D innovation and customization to drive profits. Preferred-provider lists are not an effective measure of a vendor’s true capabilities; they measure the ability to write a preferred-provider application. With the time spent on the application process, a vendor can concentrate on improving its service, which can then lead to better cost savings for its clients. Pharmaceutical companies should not accept business from every vendor that hangs up a shingle, but they should be open to, and be aware of, novel ideas and approaches. Strict adherence to preferred-provider lists will do more harm to our industry than good, and will leave innovation on the drawing board. Alex Ilg Marketing analyst Rogers Medical Intelligence Solutions What’s Your Opinion? crossing the border – reimportation Pharmaceutical companies are beginning to limit sales to Canadian pharmacies. Eli Lilly says it is making this move to protect the integrity of its products and the safety of patients. In October 2003, Lilly told 24 Canadian drug wholesalers in a letter that it will limit sales of its drugs to amounts that Lilly estimates are sufficient to supply the Canadian market only. Earlier this year, Pfizer and GlaxoSmithKline took similar steps to prevent Canadian drug sales to U.S. customers. Because of Canadian price controls, the cheaper Canadian dollar, and other factors, brand-name prescription drugs in Canada sell for 35% to 40% less than in the United States. PharmaVOICE wants to know what impact reimportation issues will have on the future? What’s your opinion? Please e-mail your comments to [email protected].

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