Wrongheaded Medicare "Reforms"
By: Peter Pitts
FrontPageMagazine.com | Thursday, October 23, 2008
Dennis Kucinich is campaigning for
a radical overhaul of the Medicare prescription drug program. The erstwhile
Presidential hopeful claims that private pharmaceutical companies have “failed”
to provide Medicare enrollees with effective and affordable drugs.
August, Kucinich introduced the “Medicare Drugs for Seniors Act,” a measure that
would completely scrap the Medicare Part D drug benefit. Instead, it would allow
program participants to buy prescription drugs from certain foreign countries
where prices are lower due to price controls. The bill would also institute
stringent price controls here in the U.S. on drugs developed using public
funds. Finally, it would allow Medicare to directly negotiate drug prices with
Kucinich’s opposition to Medicare Part D
stems from a knee-jerk aversion to free-markets and a dogmatic attraction to
big-government controls -- not an honest assessment of the facts. And the
“solutions” he’s pushing will likely choke off the next generation of
Consider the fact that 87 percent of Part D
enrollees are happy with the services provided, according to a December 2007
Harris Interactive poll. America’s Health Insurance Plans
reports that 75 percent of enrollees have saved money on their prescription drug
The projected cost of Part D over the next decade has dropped
$117 billion since last summer -- from $915 billion to $798
Also, the program has reduced out-of-pocket healthcare expenses
for the average enrollee by 17 percent, according to a study published in the
February 2008 edition of the Annals of
The truth is that Medicare Part D is
working as planned: Private drug producers are forced to compete against each
other for customers. And that competitive pressure has brought down drug prices
across the board.
As the acting administrator of the U.S. Centers for
Medicare and Medicaid Services recently concluded, “Overall, costs for
beneficiaries and taxpayers are considerably lower than original projections,
enrollment continues to rise, and customer satisfaction remains very high.”
That sure doesn't sound like a “failed” program.
alternative to Medicare Part D starts with unfettered foreign drug importation.
This facet of his plan is just plain dangerous.
For starters, drugs
manufactured abroad pose a substantial health risk. The World Health
Organization estimates that around 10 percent of the global drug supply is
Canadian pharmacies -- likely to be a popular source for
foreign meds -- often mislead customers about where their drugs were made. In
2004 the FDA examined several popular prescription drugs sold from online
Canadian drug stores. None of the pills had actually been manufactured in
Canada, and they all failed federal
What's more, drugs are cheaper abroad because foreign
governments directly control prices. If American customers start buying at
artificially low prices, drug manufacturers will see their revenues drop
precipitously. Many will go bankrupt or leave the market entirely. And that
means fewer drugs for everyone.
Kucinich’s plan to impose price controls
on government-financed drugs will have the same dampening effect on
pharmaceutical investment as importation.
According to a study from
University, among 35 widely
prescribed drugs that were financed with taxpayer dollars, none would have been
developed without private sector research. For 28 of those drugs, private sector
research led to improvements in the drug's clinical performance or manufacturing
Price controls make drugs less profitable or -- worse --
unprofitable, which in turn makes them a less appealing prospect to private
investors. If those investment dollars dry up, pharmaceutical companies will be
unable to invent new cures.
It’s a similar story with allowing Medicare
to “negotiate” drug prices. In the past, the government has used that power to
simply dictate artificially low prices. That has lead to drug scarcities and
reduced access to new drugs for patients enrolled in public healthcare
The Veterans Administration’s health system, for instance,
negotiates drug prices. The result: Less than 40 percent of the drugs approved
by the Food and Drug Administration in the 1990s and just 19 percent of the
drugs approved since 2000 were available to VA patients in 2005, according to a
study from Columbia University Prof. Frank Lichtenberg.
bill is a non-solution to a non-problem. Medicare Part D is a success. And the
Kucinich’s plans to “fix” it would do untold damage to the domestic drug
industry, and keep breakthrough pharmaceutical treatments from reaching the
patients who need them.
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