WASHINGTON, DC – At a press conference this morning, U.S. Senators Olympia Snowe (R-Maine), Ron Wyden (D-Ore.), and Dianne Feinstein (D-Calif.) unveiled the bipartisan Medicare Enhancement for Needed Drugs (MEND) Act, legislation to strengthen the drug coverage offered to seniors under the 2003 Medicare prescription drug benefit. The MEND Act directly addresses the crisis of skyrocketing drug costs in a number of ways, including giving the Secretary of the U.S. Department of Health and Human Services (HHS) the specific authority to negotiate lower prices for drug purchases through Medicare, and requiring ongoing information about savings in various plans and the prices of prescription drugs across multiple markets. The bipartisan bill is cosponsored by U.S. Senators Russell Feingold (D-Wisc.) and John McCain (R-Ariz.).

“The cost of prescription drugs places an increasingly heavy burden on the citizens of this country.  If prices are allowed to increase unchecked, the very drug benefit the Congress passed to provide seniors with relief could become threatened,” said Snowe.  “According to a recent estimate, the Medicare Prescription Drug Benefit could cost over $534 billion.   With drug prices rapidly outpacing inflation, seniors could experience a reduced benefit with the cost to the federal government increasing dramatically.  That’s why we are re-introducing the Medicare Enhancement for Needed Drugs (MEND) Act to manage costs, and assure seniors that they will receive better value for their dollar.  We take a common-sense approach by tracking drug prices and granting the Secretary of Health and Human Services the authority to negotiate for lower-cost medications.  We cannot wait until 2006 when the Medicare prescription drug benefit comes into affect.  We must address it now.”

“The MEND Act provides comprehensive, market-based cost-containment for rural and urban seniors in both private plans and Medicare-operated fallback plans, plus the potential to help contain costs for employers insuring retirees and for taxpayers as well. Giving bargaining power to millions of seniors through Medicare is Economics 101, and it’s clearly time to inject these common-sense solutions into the Medicare drug benefit,” said Wyden.

“The Medicare Prescription Drug bill  should have been an opportunity to help America ’s seniors afford their prescription drugs, not to provide the pharmaceutical companies with a massive government-sponsored subsidy,” Feinstein said. “When it was clear that the bill didn’t include provisions for the government to use its purchasing power to negotiate for lower prices, I knew there was a major problem. That’s why we’re offering this legislation - to fix the problem and take a step toward controlling the spiraling cost of prescription drugs.”

The MEND Act repeals Section 1860D-11(I), or the non-interference provision, of the Medicare prescription drug benefit, which prohibits the HHS Secretary from negotiating for lower-cost drugs in bulk. MEND grants the Secretary specific authority to bargain for better prices and improved access to medicines in the same way that private insurers and private businesses negotiate for lower costs in bulk. This effectively levels the playing field for more seniors; the MEND Act requires the Secretary of HHS to negotiate for “fall-back” plans, which are Medicare-operated plans designed to give more choice to seniors who live in areas with limited private options, and also in any case where a private insurance plan asks for help in negotiating lower drug prices.

Also in MEND, the Centers for Medicare and Medicaid Services (CMS) would be required to determine the negotiated savings received from each plan by the average Medicare beneficiary. This would help seniors make an “apples to apples” comparison to determine which plan provides the best savings. This information would be shared with all beneficiaries during the annual fall enrollment period.

Additionally, the MEND Act writes into law a request that Snowe and Wyden made last December for the Government Accountability Office (GAO) to track ongoing changes in drug prices from 2000 to 2003. After conducting that review, the GAO will continuously review the retail cost of prescription drugs used most by seniors through April 1, 2006. This step is essential to ensure that pharmaceutical companies do not arbitrarily increase drug prices as the Medicare drug benefit takes effect. MEND also requires GAO to compare drug prices negotiated by DOD and the VA against other privately run systems, providing critical information on whether the government or private plans negotiate for the best prescription drug prices.

Lastly, in an effort to confront concerns that the Medicare prescription drug benefit restricts Medigap coverage, this legislation directs the Secretary of HHS to work with the National Association of Insurance Commissioners to conduct a review of the changes to the Medigap policies in the new drug benefit to evaluate its impact on Medicare beneficiaries. Medigap coverage is any private health insurance purchased by individuals to supplement services not covered by Medicare (e.g., deductibles, co-payments, and outpatient prescription drugs).

When Snowe and Wyden voted for the Medicare prescription drug benefit, both promised to work to strengthen its saving power for seniors. The Senators have a long history together promoting bipartisan, common-sense legislative solutions on health care; in 1999, they introduced the first bipartisan Medicare prescription drug bill known as the SPICE Act. That same year, as members of the Senate Budget Committee, they established the first reserve fund to set aside $40 billion for the creation of a drug benefit.

The MEND Act is expected to be referred to the Senate Committee on Finance, of which Snowe and Wyden are both members.