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A Prescription Drug Benefit: So Popular, So Elusive


Washington Outlook

A Prescription Drug Benefit: So Popular, So Elusive

These days, it's rare to find an idea that everyone in Washington can rally behind. But when George W. Bush announced support for a prescription drug benefit for seniors on May 15, he joined a long list of backers. President Clinton first laid out his Medicare drug plan a year ago. Since then, a bipartisan group of House and Senate lawmakers, the pharmaceutical industry, and Vice-President Al Gore have all scrambled on board. No wonder: A recent poll shows that 70% of Americans support the concept, even if it means higher payroll taxes.

With momentum building, voters can expect that new benefit this year, right? Maybe not. Turns out that support is a mile wide and an inch deep. While publicly agreeable, the drug industry is split. Makers of high-cost drugs worry that they'll get little benefit from proposals, including Clinton's, that cap annual coverage. Companies that don't own a pharmacy-benefit manager like the Medco unit of Merck & Co. fear that they'll lose market share to those that do.FEAR AND MISTRUST. In addition, designing a benefit that's both affordable and satisfies numerous interest groups is proving tricky. Many observers believe House Minority Leader Richard A. Gephardt (D-Mo.) would like to see the GOP Congress fail to pass a measure this year. Then the Dems could use the issue in their drive to win back the House. "What we'll see is political theater, not much substance," says Bruce C. Vladeck, an ex-official of Medicare who heads the Institute for Medicare Practice at Mt. Sinai School of Medicine in New York.

Fear and mistrust are the biggest stumbling blocks. Drugmakers worry that any federal program will become a back door to price controls. Indeed, with prices for medicines rising faster than inflation, even some Republicans are criticizing the industry. Other GOPers are miffed over meetings earlier this year between the Pharmaceutical Research & Manufacturers of America and the White House. They fear that's evidence--wrongly, says PhRMA--of a private deal in the works. Meanwhile, Clintonites are upset with PhRMA for not lining up behind the Administration.

Nor does it help that the various factions can't agree on a basic approach. Clinton's plan would expand Medicare by paying up to half of a recipient's drug bill--as much as $1,000 in 2003 and $2,500 by 2009. Republicans would encourage the private sector to offer drug insurance by subsidizing the premiums that low-income Medicare beneficiaries would pay. And Senator John B. Breaux (D-La.), a leading health-care thinker, would allow a new drug benefit only in the context of overall Medicare reform. "Both parties are completely split on what to do," says GOP health adviser Deborah Steelman.

The complexity of the drug market, along with new drugs that prevent diseases and raise life expectancy, are all making it hard to estimate future drug spending and thus design a program that doesn't spin out of control. The Congressional Budget Office first put the cost of Clinton's plan at $149 billion over 10 years. On May 11, it raised that to $160 billion.

Supporters of a benefit, including Senator Edward M. Kennedy (D-Mass.) and Representative William M. Thomas (R-Calif.), and even some industry lobbyists, still hope for passage this year. The key, they say, is for the GOP and the White House to cut a deal in which each side can claim victory. The legacy-obsessed Clinton would get his seniors' drug plan, the thinking goes, if he O.K.'s some modest GOP tax relief. Industry could be brought aboard by the promise of no price controls. Thanks to the budget surplus, there could be enough cash in the federal till to pull off such a maneuver. But given the wariness on all sides, a deal seems unlikely.By Paula Dwyer and John Carey; With Phoebe EliopoulosReturn to top


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