Letter: Prescription drug plan is working well

Sunday, May 20, 2007 | 6:56 a.m.

Your May 18 editorial on the Medicare prescription drug program ("Remedy is needed: Government should be doing its own negotiating when it comes to prescription drug prices") relied heavily on an unpublished, unscientific report that did not consider several critical facts that ultimately determine what beneficiaries actually pay for their prescription medicines.

First, the Medicare prescription drug program continues to provide large cost savings to tens of millions of seniors and disabled Americans. Unfortunately, the House Government Reform Committee's report cited in the editorial focuses on just a handful of medicines to draw sweeping conclusions.

Second, these types of one-sided reports based on prices listed on Medicare Plan Finder can be very misleading, especially since those prices do not necessarily reflect true plan costs. The Medicare law and Centers for Medicare and Medicaid Services (CMS) guidance allow savings - such as rebates - to be used to reduce the cost of providing drug coverage in a number of ways, rather than just by lowering prices in the coverage gap. For instance, plans can use savings to lower premiums or eliminate deductibles.

Additionally, premiums have been far lower than projected and most seniors have chosen plans that have eliminated the deductible. According to CMS, average premiums in 2007 are $22 per month, dramatically below the amount projected when the Medicare law was passed and one dollar below the 2006 average.

The committee's report also missed the fact that substantial rebates exist for many brand-name prescription drugs, often as much as 20-30 percent, according to the Medicare Trustees report issued last April. This is not reflected by average rebate amounts, since more than half of all Medicare D prescriptions are for generic drugs, which typically do not carry manufacturer rebates.

Rather than drawing conclusions based on flawed assumptions, we should focus on helping seniors and disabled Americans enroll in a Medicare Part D plan that best meets their individual medical needs.

Ken Johnson, Washington

The writer is senior vice president of communications and public affairs for the trade group Pharmaceutical Research and Manufacturers of America.