Editorial: Drug plan’s headache

Saturday, June 24, 2006 | 7:51 a.m.

Another flaw in the government's new Medicare prescription drug plan for seniors has emerged. It seems that the fledgling "Part D" program is not at all immune to the sudden soaring costs of medications, which may force participants to pay higher premiums.

The cost of brand-name prescription drugs spiraled in the first quarter of the year, according to two studies released separately this week by the seniors group AARP and Families USA, a patient advocacy group. The sleep aid Ambien, which increased in price by 13.3 percent, and the pain reliever Celebrex, up 6.5 percent, were among the examples cited by AARP.

AARP examined the prices of the 193 medications most taken by seniors. The group estimated that for a senior who takes four medications a day, the cost of wholesale brand-name drug price increases will translate to a $240 average increase in annual drug costs.

There is some good news: People can avoid a good share of the price spikes by taking generic drugs. But the bad news for brand-name drug takers is that price hikes in the Medicare plans in the last year have matched the increases in wholesale prices, Families USA said. The group noted that the Veterans Affairs Department now offers brand-name drugs at prices 46 percent less than the Medicare plans because, unlike Medicare, the VA can negotiate prices with the drug makers. Congress, bowing to pressure by drug makers, actually wrote into law a provision that bars Medicare from negotiating for lower prices.

The bottom line is that increased drug prices could lead to higher Medicare program premiums next year. That could lead to fewer enrollees, which could drive premiums even higher, Stephen Schondelmeyer, a University of Minnesota economist, told The New York Times. That's bad news for consumers, especially seniors. This is yet one more example of the many problems in the Medicare drug plan championed by President Bush.