Editorial: Remedy is needed

Wednesday, May 16, 2007 | 7:15 a.m.

T he Bush administration program that allows private insurers to negotiate drug prices for Medicare prescription drug plans isn't keeping those prices down as promised.

According to a story by The Washington Post on Saturday, a congressional investigation shows that prices for the 10 brand-name drugs that are prescribed most often rose 7 percent from December to April. Federal officials had expected drug prices to increase by that amount over the course of 2007 - not in the first four months of the year.

The data were compiled by House Oversight and Government Reform Committee investigators, who also said premiums for Medicare drug plans have increased by 13 percent since going into effect last year.

Drug manufacturers and health insurers told the Post that the investigators' figures are misleading because they focus on brand-name drugs, which are more expensive than the generics that the private plans emphasize. But the 10 drugs chosen were the ones prescribed most often - such as cholesterol-lowering Lipitor - and nine of them have no generic alternatives, the Post reports.

Although the overall costs of the drug program remain below initial projections, that won't last for long if prescription drug prices keep making 7 percent jumps every four months. And such increases can drastically affect senior citizens who fall into the plan's so-called "doughnut hole" - a gap in coverage that occurs when a Medicare recipient's drug benefit hits $2,250. Coverage does not resume until the recipient has spent $3,600 of his or her own money for medicine.

Rep. Harry Waxman, D-Calif., the panel's chairman, hopes to resurrect legislation that would allow the federal government to negotiate its own Medicare prescription drug prices. Such a measure has passed the House. But Senate Republicans defeated it through filibuster.

It has always been naive to think that private health insurers on their own would be able to negotiate the best possible drug prices for Medicare patients. These price hikes illustrate exactly the reason why the government - with its prodigious bargaining power and size - should be using its leverage to negotiate drug prices.