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April 10, 2000: Releasing a New Study on Prescription Drug Coverage & Pricing

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"This report makes clear that uninsured seniors not only lack prescription drug coverage, but also are denied the significant discounts and rebates that those with coverage receive. It's time to level the playing field for both coverage and prices for all of America's seniors."

President Bill Clinton
Monday, April 10, 2000

Today, at the White House, President Clinton released a new study by the Department of Health and Human Services showing that seniors without drug coverage not only lack insurance against high prescription drug costs, but do not have access to the discounts and rebates that insured people receive. The study also found that Medicare beneficiaries without drug coverage fill fewer prescriptions and have higher out-of-pocket spending across all groups - even the most ill. The President underscored that these findings confirm the need for a voluntary, affordable prescription drug benefit available to all beneficiaries, and announced that his Administration will hold a conference on prescription drug pricing practices this summer.

Study Yields More Evidence of the Need for a Prescription Drug Benefit. The HHS study released today, “Prescription Drug Coverage, Spending, Utilization, and Prices,” is further proof that America's seniors need a prescription drug benefit that is accessible and affordable to all beneficiaries. Key findings of the study include:

  • Prescription drug prices for those without coverage are typically 15 percent higher than prices paid on behalf of people with coverage;
  • The gap between drug prices for people with and without insurance discounts nearly doubled, from 8 to 15 percent, between 1996 and 1999 – not taking into account manufacturers' rebates, which could widen the gap by an additional 2 to 35 percent;
  • Medicare beneficiaries without drug coverage are five times more likely to report being unable to purchase prescriptions as those with coverage;
  • In addition to the millions of completely uninsured, nearly half of seniors with Medigap did not have coverage for prescription drugs for the entire year, leaving them vulnerable to catastrophic drug costs;
  • Between 1993 and 1998, spending nationwide for prescription drugs increased at an annual rate of 12 percent, compared to about 5 percent for all other types of health spending. Prescription drugs now account for about one-sixth of all out-of-pocket health spending by the elderly; and
  • Medicare beneficiaries without coverage purchase one-third fewer drugs but pay nearly twice as much out-of-pocket as those with coverage, regardless of income, age, or other factors.

Announcing a Conference on Drug Costs and Pricing Practices. As the study makes clear, not enough is known about prescription drug costs and pricing practices used by the pharmaceutical industry. Today, President Clinton announced that his Administration will convene a conference this summer with researchers and representatives of beneficiaries, purchasers, pharmacists, and pharmaceutical manufacturers to clarify pricing and discounting practices and their impact on Medicare beneficiaries.

President's Plan Would Strengthen and Modernize Medicare. President Clinton's plan gives Medicare beneficiaries the option to purchase a prescription drug benefit that covers half of all drug costs up to $5,000 when fully phased in, and includes a stop-loss provision to protect seniors against catastrophic drug costs. The plan would be affordable to both beneficiaries and the program, be competitively administered, and ensure access to needed medications. The President's prescription drug benefit is part of his larger plan to strengthen and modernize Medicare, which includes making Medicare more competitive and extending the life of its trust fund to at least 2030.

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