Fornits
General Interest => Open Free for All => Topic started by: Anonymous on February 03, 2006, 01:15:00 AM
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http://news.ft.com/cms/s/fb12cfd6-9444- ... e2340.html (http://news.ft.com/cms/s/fb12cfd6-9444-11da-82ea-0000779e2340.html)
Medicare hails success of drug subsidy
By Christopher Bowe in New York
Published: February 3 2006
Medicare, the US healthcare programme for the elderly, went on the offensive on Thursday, saying its newly launched prescription drug subsidy was working as intended by saving money for pensioners and government.
The Centers for Medicare and Medicaid Services (CMS) said ?stronger than expected competition in the prescription drug market and lower drug costs? would help lower programme costs this year and beyond. The CMS actuarial office estimated a pensioner?s monthly premiums would be $25 (?20.6, £14), down from last year?s forecast of $37, and government?s cost this year would be $30.5bn ? 20 per cent less than forecast.
It also lowered the total Medicare drug benefit cost to 2015 by 14 per cent to $797bn, compared with $926bn estimated in July.
CMS?s rosy progress report and outlook comes as critics continue to blast the Medicare drug benefit as bloated, ill-conceived and overly complex.
It also comes as part of the Bush administrations? push to reclaim political territory to improve healthcare using free-market based schemes, as well as to satisfy calls for better fiscal restraint and budget preparation.
Many Democrats argue that the federal government needs more control of Medicare?s enormous costs, while elderly patients say they are confused over how to sign up to the plan, and state governments complain that errors have left poor patients without medicine.
California threatened a lawsuit this week against the federal government because it has had to pay more to ensure poor patients receive medicine that should have been covered by Medicare.
The Medicare drug benefit, known as Part D, was launched on January 1 and remains a lightning rod of controversy. Part D gives pensioners drug insurance using private companies known as pharmacy benefit managers. The law creating it also forbids the federal government from negotiating drug prices in Medicare.
It also promised to help states save on costs in Medicaid, the federal/state healthcare programme for the poor, by transferring the elderly poor?s drug costs to Part D.
Any problems are of concern to the Bush administration and Republicans, who pledged that the plan would improve elderly healthcare.
But CMS on Thursday said the market competition was working, and new enrolment had reached about 4m older people toward the goal of up to 10m, and 30m pensioners receiving drug subsidy.
Mark McClellan, chief of Medicare and Medicaid, said: ?The new drug coverage is the most important new benefit in Medicare in 40 years, and as a result of strong competition in the prescription drug marketplace, it will cost much less than had been expected.?
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Total propoganda.
http://fornits.com/wwf/viewtopic.php?to ... forum=32&4 (http://fornits.com/wwf/viewtopic.php?topic=12071&forum=32&4)
The only groups this helped are the drug companies and Medicare, and to a slight degree, those who take over $1000 worth of rx per month.
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On 2006-02-03 10:06:00, Deborah wrote:
The only groups this helped are the drug companies and Medicare
How does this help Medicare?
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Drug firms to get profits windfall
By Tony Pugh
KNIGHT RIDDER
WASHINGTON - The new Medicare drug benefit will give drug companies as much as $2 billion in extra profits this year because they're no longer required to pay rebates on drugs bought by the government for the elderly poor.
The hefty windfall raises new concerns that the Bush administration won't fully realize its promises of lower drug prices in the troubled new program.
The boost in profits comes from a shift in the drug coverage of 6.4 million poor and elderly people from Medicaid to the new Medicare drug benefit.
Unlike Medicaid, which requires drug companies to charge their lowest or "best price" for medications, the Medicare program relies on competition among private drug plans to keep prices low.
By eliminating the need to discount drugs for the government, the industry can now pocket the savings.
"The net effect over 10 years is probably closer to $40 billion in extra profit," said Stephen Schondelmeyer, a pharmaceutical economics professor at the University of Minnesota.
A little-known study by the Prudential Equity Group from June 2005 estimated that the makers of three anti-psychotic medications stand to benefit most from the change, taking in roughly $1.1 billion in new profits on products used by the 6.4 million who are Medicare's most poor and frail patients.
Experts say drug prices in the Medicare program will be higher this year than prices under Medicaid because the private Medicare drug plans won't likely match the price discounts achieved by Medicaid, the joint state and federal health program for the poor.
But the new profit estimates and the higher drug price projections have rekindled accusations that the Medicare drug benefit enriches drug companies at the expense of U.S. taxpayers.
Medicare administrator Mark McClellan questioned Prudential's findings.
In testimony before the Senate Special Committee on Aging on Thursday, he said Medicare plans are covering people at a cost average of 15 percent less than expected, which has helped push the average plan premium down to $25.
As a result, the cost of the drug plan likely will be $30.5 billion in 2006, down from an earlier estimate of $38.1 billion, McClellan testified.
And the program's 10-year cost estimate has likewise dipped from $926 billion to $797 billion.
"The drug plans are negotiating aggressive discounts and rebates that are being passed along to beneficiaries and taxpayers," McClellan said.
According to Prudential, the medications that will gain the most and the profits they're likely to reap are Seroquel by AstraZeneca ($521 million); Lamictal by GlaxoSmithKline ($298 million) and Zyprexa by Eli Lilly ($285 million).
Those figures reflect Prudential's estimates that Medicare drug plans will negotiate discounts amounting to only 5 percent of what the drug companies paid in rebates to Medicaid on those products.
An AstraZeneca spokesperson questioned the study's methodology, saying the profit estimate for Seroquel, a schizophrenia medication, was too high. AstraZeneca gave no alternate figures.
A GlaxoSmithKline spokesperson wouldn't discuss projected earnings for Lamictal, a treatment for bipolar disorder.
A Lilly spokesperson said the company expected only a "modest short-term benefit to sales" for Zyprexa under the Medicare program, but wouldn't give specifics.
Zyprexa, also a schizophrenia treatment, is Lilly's top-selling product, with U.S. sales of $2.04 billion in 2005. Lilly's earnings per share could rise by 6 percent in 2006 just by escaping the rebates, the Prudential study estimates.
With U.S. sales of $2.76 billion in 2005, Seroquel's increased Medicare profit could boost AstraZeneca's earnings per share by 8 percent, the report found.
Company policy prohibits Prudential analysts from discussing reports with non-clients, said company spokesman Jim Gorman.
Tony Butler, managing director and pharmaceutical analyst at Lehman Bros., an investment bank in New York, agreed with the report that Medicare would probably have higher drug prices than Medicaid.
Butler estimated the sales windfall for drug companies under Medicare to be between $1.8 billion and $2 billion.
He said profits would likely increase in coming years as more businesses cut retirees' drug benefits and steer their former employees into the Medicare drug plans.
Rep. Henry Waxman, D-Los Angeles, the ranking minority member of the House Committee on Government Reform, has asked the Government Accountability Office to investigate the profits as a waste of taxpayer money.
In a Jan. 27 letter to GAO Comptroller General David Walker, Waxman wrote, "There appears to be no rational policy justification for providing this immense hidden subsidy to the drug industry. ...
"It appears that the only party benefiting in this arrangement are the drug companies that give millions to the Republican leaders who drafted the legislation."
Waxman and other Democrats say that Republicans withheld vital cost information about the program, allowed drug industry lobbyists to draft the proposal and fought efforts to have the government use its leverage to negotiate lower drug prices.
During the Senate committee hearing Thursday, Sen. Rick Santorum, R-Pa., defended the Medicare drug plan as a flawed but worthy product of a political dogfight.
"It was the best we could accomplish given a very divided atmosphere here in Washington, D.C.," Santorum said.
"So it is somewhat remarkable to expect that something that's the product of deep division, lots of haggling, lots of changes that occurred throughout the legislative process, is going to result in a perfect system
Committee members Sen. Herb Kohl, D-Wis., and Sen. Hillary Clinton, D-N.Y., discounted McClellan's cost projections as premature.
Brand-name drugs purchased under Medicaid are discounted by at least 15 percent and they increase to up to 30 percent when inflationary rebates are added.
Discounts negotiated by the private Medicare drug plans are expected to save 15 percent in 2006 and to peak at 25 percent in 2011, according to government estimates.
Those projections are based on enrollment assumptions and reflect the Bush administration's belief that competition among hundreds of different Medicare drug plans will ultimately drive down drug prices.
Medicare officials say that's already happening. "Based on the prices we've looked at, we believe the drug plans are getting better net prices than those paid under Medicaid," said Medicare spokesman Gary Karr.
He said governors across the country have reported the same thing.
But Schondelmeyer said that's not the norm. He studied about 40 plans in one area of Minnesota and found that prices in each plan on 25 different drugs were within four percentage points of the regular retail drug prices.
And most of the Medicare plan prices were 20 percent to 30 percent higher than the cost under Medicaid.
Schondelmeyer doesn't envision the Medicare program getting better prices than Medicaid at any point in the future because dozens of private plans won't have as much negotiating clout as a government-run program.
"The argument that more plans will be more competitive doesn't appear to be true. More players doesn't result in lower prices if they have much smaller volumes and much less leverage," Schondelmeyer said.
The full article will be available on the Web for a limited time:
http://www.contracostatimes.com/mld/cct ... 782116.htm (http://www.contracostatimes.com/mld/cctimes/13782116.htm)
(c) 2006 ContraCostaTimes.com and wire service sources. All Rights Reserved.
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On 2006-02-03 10:23:00, Anonymous wrote:
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On 2006-02-03 10:06:00, Deborah wrote:
The only groups this helped are the drug companies and Medicare
How does this help Medicare?"
Take a look at the link I posted. Only the extremely destitute now receive any aid at all. Destitute meaning, annual income of $8700 or less, homeless probably. Medicare will save millions. The link I provided explains it in detail, if you are interested.
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That was me. Here's the link I referenced.
http://fornits.com/wwf/viewtopic.php?to ... forum=32&4 (http://fornits.com/wwf/viewtopic.php?topic=12071&forum=32&4)
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On 2006-02-03 15:56:00, Deborah wrote:
"That was me. Here's the link I referenced.
http://fornits.com/wwf/viewtopic.php?to ... forum=32&4 (http://fornits.com/wwf/viewtopic.php?topic=12071&forum=32&4) "
Damn, a slight of hand political promise.
Thanks!