Medicare part D : implementation of the new drug benefit : hearing before the Subcommittee on Health of the Committee on Energy and Commerce, House of Representatives, One Hundred Ninth Congress, second session, March 1, 2006

2006·13.8 MB·English

by  United States. Congress. House. Committee on Energy and Commerce. Subcommittee on Health

MEDICARE PART
D:
IMPLEMENTATION OF THE NEW
DRUG BENEFIT
HEARING
BEFORETHE
SUBCOMMITTEE ON HEALTH
OF THE
COMMITTEE ON ENERGY AND
COMMERCE
HOUSE OF REPRESENTATIVES
ONEHUNDREDNINTH CONGRESS
SECONDSESSION
MARCH
1,2006
Serial No. 109-129
Printedfortheuse ofthe Committee onEnergyandCommerce
AvailableviatheWorldWideWeb: http://www.access.gpo.gov/congress/house
U.S.GOVERNMENTPRINTINGOFFICE
31-429PDF WASHINGTON 2006
:
ForsalebytheSuperintendentofDocuments,U.S.GovernmentPrintingOffice
Internet:bookstore.gpo.gov Phone:tollfree(866)512-1800;DCarea(202)512-1800
Fax:[phone] Mail:Stop SSOP,Washington,DC20402-0001
COMMITTEEONENERGYANDCOMMERCE
JoeBarton,Texas,Chairman
RalphM.Hall,Texas JohnD.Dingell,Michigan
MichaelBilirakis,Florida RankingMember
ViceChairman HenryA.Waxman,California
FredUpton,Michigan EdwardJ.Markey,Massachusetts
CliffStearns,Florida RickBoucher,Virginia
PaulE.Gillmor,Ohio EdolphusTowns,NewYork
NathanDeal,Georgia FrankPallone,Jr.,NewJersey
EdWhitfield,Kentucky SherrodBrown,Ohio
CharlieNorwood,Georgia BartGordon,Tennessee
BarbaraCubin,Wyoming BobbyL.Rush,Illinois
JohnShimkus,Illinois AnnaG.Eshoo,California
HeatherWilson,NewMexico BartStupak,Michigan
JohnB.Shadegg,Arizona EliotL.Engel,NewYork
CharlesW."Chip"Pickering, Mississippi AlbertR.Wynn,Maryland
ViceChairman GeneGreen,Texas
VlTOFOSSELLA,NewYork TedStrickland,Ohio
RoyBlunt,Missouri DianaDeGette,Colorado
SteveBuyer,Indiana LoisCapps,California
GeorgeRadanovich,California MikeDoyle,Pennsylvania
CharlesF.Bass,NewHampshire TomAllen,Maine
JosephR.Pitts,Pennsylvania JmDavis,Florida
MaryBono,Cahfomia JanSchakowsky,Illinois
GregWalden,Oregon HildaL.Solis,California
LeeTerry,Nebraska CharlesA.Gonzalez,Texas
MikeFerguson,NewJersey JayInslee,Washington
MikeRogers,Michigan TammyBaldv/in,Wisconsin
C.L."Butch"Otter,Idaho MikeRoss,Arkansas
SueMyrick,NorthCarolina
JohnSullivan,Oklahoma
TimMurphy,Pennsylvania
MichaelC.Burgess,Texas
MarshaBlackburn,Tennessee
BudAlbright,StaffDirector
DavidCavicke,GeneralCounsel
Reidp.F.Stuntz,MinorityStaffDirectorandChiefCounsel
SUBCOMMITTEEONHEALTH
NathanDeal,Georgia,Chairman
RalphM.Hall,Texas SherrodBrown,Ohio
MichaelBilirakis,Florida RankingMember
FredUpton,Michigan HenryA.Waxman,California
PaulE.Gillmor,Ohio EdolphusTowns,NewYork
CharlieNorwood,Georgia FrankPallone,Jr.,NewJersey
BarbaraCubin,Wyoming BartGordon,Tennessee
JohnShimkus,Illinois BobbyL.Rush,Illinois
JohnB.Shadegg,Arizona AnnaG.Eshoo,California
CharlesW."Chip"Pickering Mississippi GENEGREEN,Texas
,
SteveBuyer,Indiana TedStrickland,Ohio
JosephR.Pitts,Pennsylvania DianaDeGette,Colorado
MaryBono,California LoisCapps,California
MikeFerguson,NewJersey TomAllen,Maine
MikeRogers,Michigan JimDavis,Florida
SueMyrick,NorthCarolina TammyBaldwin,Wisconsin
MichaelC.Burgess,Texas JohnD.Dingell,Michigan
JoeBarton,Texas (ExOfficio)
(ExOiiuJO)
ai)
3
CONTENTS
Page
Testimonyof:
McClellan,Hon.Mark,Administrator,CentersforMedicare&MedicaidServices 32
Dennison,Anne 11
Hickerson,Marcus 116
Song, Dennis, Flower Moimd Herbal Pharmacy, on behalfofNational Community
PharmacistAssociation 122
Paul,Tom,ChiefPharmacyOfficerforOvations,UnitedHealthGroup 128
Walsh, Jude E., Special Assistant, Governor's Office ofHealth Policy and Finance,
StateofMaine 137
Ettienne,Earl,SeniorRXSupervisor,CVS/Pharmacy 142
Lipshutz,DavidA.,StaffAttorney,CaliforniaHealthAdvocates 148
Rawlings,Susan,President,SeniorServices,WellPoint,Inc 159
Additionalmaterialsubmittedfortherecord:
McClellan, Hon. Mark, Administrator, Centers for Medicare & Medicaid Services,
responsefortherecord 174
Q^SUbrarv
C2-07-13
7500 Security Bfvd,
Sattlmore, Marytend 21244
(III)

MEDICARE PART IMPLEMENTATION
D:
OF THE NEW DRUG BENEFIT
WEDNESDAY,MARCH 1, 2006
HouseofRepresentatives,
CommitteeonEnergyand Commerce,
Subcommittee onHealth,
Washington, DC.
The subcommittee met, pursuant to notice, at 2:00 p.m., in Room
2123 of the Raybum House Office Building, Hon. Nathan Deal
(chairman) presiding.
Members present: Representatives Deal, Hall, Bilirakis, Gillmor,
Norwood, Shimkus, Pickering, Buyer, Pitts, Ferguson, Burgess, Barton
(ex officio). Brown, Waxman, Towns, Pallone, Gordon, Rush, Eshoo,
Strickland, DeGette, Capps, Allen, Davis, Baldwin, and Dingell (ex
officio).
Staff present: Chuck Clapton, Chief Health Counsel; Melissa
Bartlett, Counsel; Ryan Long, Counsel; Nandan Kenkeremath, Counsel;
Bill O'Brien, Research Assistant; David Rosenfeld, Counsel; Brandon
Clark, Policy Coordinator; John Ford, Minority Counsel; Chris Knauer,
Minority Investigator; Purvee Kempf, Minority Counsel; Amy Hall,
Minority Health Professional Staff Member; Bridgett Taylor, Minority
Health Professional StaffMember; Jessica McNiece, Minority Research
Assistant; Jonathan Brater, Minority Staff Assistant; and Chad Grant,
Legislative Clerk.
Mr. Deal. The meeting will come to order. Ifsomeone would get
the door in the back, please. The Chair recognizes himself for an
opening statement. We are pleased to have Dr. McClellan here as our
member ofour first panel and another rather distinguished second panel
thatwill follow shortly thereafter. The purpose ofthe hearing today is to
examine the implementation of the new Medicare prescription drug
benefit. Today, I believe, marks the sixtieth day ofthe implementation
of the biggest change to Medicare in its 40-year history. Like most
significantprograms, the newbenefit has not gone without a few isolated
glitches and unexpected problems, but I believe that ifthere is anything
wrong with the plan, most ofithas been fixed andthat that hasn't can be
fixed over time. In fact, I understand that most ofthe early glitches in
the program have already been resolved thanks to the hard work and
cooperation of CMS, pharmacists who are dealing with it on a daily
basis, andtheprescription drugplans, themselves.
(1)
2
Because ofthis new benefit, America's senior citizens are better off,
and today more than 25 milUon Medicare beneficiaries are receiving
benefits under this new Medicare prescription drug benefit. This
includes more than 5.3 milHon beneficiaries who have signed up
individually for prescription drug coverage in the last three months,
including 1.5 million who have signedup inthe last 30 days.
The new prescription drug benefit is working for American citizens
because of the hard work and commitment by pharmacists, physicians,
plan employees, public administrators in the States, Dr. McClellan and
his staff at CMS. Also, by all the cooperation of family and friends of
Medicare beneficiaries who take the time to help their loved ones signup
for the plan and to make the right choices that they think meet their
individual needs.
I talked with constituents in my district and many of them tell me
that before the implementation of this benefit, they were spending
several hundred dollars out of their own pocket on prescription drugs.
Many times it was equal to, and in some cases even exceeding, their
Social Security benefits. Today, many of these constituents are now
spending less than $100 a month thanks to this new prescription drug
benefit. Many of them tell me that sometimes the money they didn't
have for drugs, they had to put on credit cards or ask family members to
assist in paying for those benefits, and by having this benefit available it
has restoredtheirpersonal dignity.
Anything that you try to do is going to have objectors, and we have
certainly had our share of objectors, and we will hear some of those
objections, I am sure, here today. Many of us have held town hall
meetings across our districts and have provided assistance in enrolling
seniors into programs. Others have not been quite so cooperative in that
effort, but many ofmy colleagues on this committee have done exactly
that ~ both Democrats and Republicans. I thankthem for that, because I
think it is our obligation to assist seniors in making this benefit package
work forthem.
I want to thank our expert panel ofwitnesses for taking their time to
come and we are going to hear a variety ofpoints ofview, obviously, in
a panel as large as the second panel will be. I look forward to hearing
your testimony. Thank you again and at this time I would recognize the
Ranking Member, Mr. Brown.
[Theprepared statement ofHon. NathanDeal follows:]
PreparedStatementoftheHon.NathanDeal,Chairman,Subcommitteeon
Health
• The Committee will come to order and the Chairrecognizes himselffor an opening
statement.
3
• The purpose ofthis hearing is to examine the implementation ofthe new Medicare
prescriptiondrugbenefit.
• Todaymarksthe60*dayoftheimplementationofthebiggestchangetoMedicarein
the40yearhistoryoftheprogram.
• Andlikemostsignificantnewprograms,thisnewbenefithasnotgonewithoutafew
isolatedglitchesandunexpectedproblems.
• However, I believe that there isn't anything wrong with the Medicare prescription
drugbenefitthatcannotbefixedwithtime.
o In fact, I understand that most of the early glitches in the program have
already been resolved thanks to the hard work and cooperation of CMS,
pharmacists,andtheprescriptiondrugplans.
• Becauseofthisnewbenefit,America's seniorcitizensarebetteroff
• Today,morethan25 millionMedicarebeneficiariesarenowreceivingbenefitsunder
thenewMedicareprescriptiondrugbenefit
o This includes more than 5.3 million beneficiaries who have signed up
individually forprescription drug coverage inthe lastthreemonths, including
1.5millionwhosignedupinthelast30days.
• The new prescription drug benefit is working for America's seniors because ofthe
hardworkandcommitmentby
o Pharmacists
o Physicians
o Planemployees
o PublicAdministratorsinthe states
o Dr. McClellanandhisstaffatCMS
o And all the friends and family ofMedicare beneficiarieswho tookthe timeto
make sure their loved ones took advantage ofall ofthe choices in plans and
enrolledintheplanthatbestsuitstheirindividualneeds
• I talk with constituents all the time in my district that tell me that before the
implementation ofthis benefit, they were spending several hundred dollars out their
own pocket on prescription drugs. Many times they were turning over their entire
Social Security check to the pharmacist and still not able to buy all the drugs they
neededto stayhealthy.
o These same constituents are now spending less than $100 permonth on their
drugseachmonththankstothenewMedicarePrescriptionDrugBenefit.
o They tell me how they now have several hundred dollars a month that they
didn't have before to spend on things otherthan drugs and that they are now
able to take all the drugs they need without having to borrow money from
creditcardcompaniesandfamilymembers.
o Formanyofthem,thisnewbenefithasgiventhemtheirdignityback.
• Unfortunately, as is so often the case, the people who voted against this bill find
themselves on the wrong side of history and are now taking advantage of every
opportunity to attackthis newbenefitby seizing on every little temporary glitch and
exaggeratingoftenisolatedproblemsandmakingthemseemlikethenorm.
• Ofcourse,thesepartisanattacksandpoliticalposturingdonothingtohelpAmerica's
seniors.
• Infact, ratherthanholdingtownhallmeetingsto educatebeneficiaries aboutthe law
andhelp thempick aplan thatbest meets theirneeds, the Democratic Leadership is
instructingtheirMemberstoholdtownhallmeetingsblastingthebenefit.
• How many seniors have they scared away from saving thousands ofdollars in drug
costsbecauseoftheirrhetoric?
• How many seniors are having to do without some of the medications they need
becauseofthisrhetoric?
4
• Howmanyseniorsarehavingtogototheirfamilymembers, swallowtheirpride, and
askformoneyfortheirdrugsbecauseofthisrhetoric?
• But I want to thank my Democratic colleagues who chose not to go this route and
hurtourseniorcitizensinexchangeforsome short-termpoliticalgain.
• Indeed, many Democrats on this Committee have made the right decision by not
goingthePelosiroutebutinsteadchoseto help theirconstituents getthemostoutof
this wonderful new benefit by holding educational town hall meetings and helping
theirseniorsenrollinthemostappropriateplanfortheirneeds.
o Itismyhopethatmoreofyourcolleagueswillfollowyourlead.
• Iwantto thank our expertpanel ofwitnesses fortakingthe time to testifybefore us
today. Ilookforwardtohearingfromeachofyou.
Mr. Brown. Thank you, Mr. Chairman, and welcome, Dr.
McClellan. Nice to see you again. Thankyou forjoining us. You and I
have spoken about and I appreciate your taking my call a couple of
weeks ago about the frustration, anxieties they try to navigate, as seniors
try to navigate the new drug program. I know you have taken steps to
improve customer service at the request of many on both sides of the
aisle, this panel and others, and I am grateful for that. Insurers like
Anthem in Ohio have been trying to make the best out ofabad situation.
I am equally grateful forthat. But no one inthe Bush Administration, no
one in the insurance industryhas beenwilling to acknowledge, much less
D
tackle, the big issues that Medicare Part has brought. I find that
appalling.
When Democrats talk about the problems dragging this program
down, we are accused ofpoliticizing the issue. That accusation would
carry a lot more weight ifwe were making a mountain out ofa molehill.
Instead, the Bush Administration and the Republicans in Congress are
trying to make a molehill out of a mountain. The problems with this
drugprogram are real, they are significant, they are ongoing. Ifsomeone
doesn't take those problems seriously and it doesn't sound like people in
this institution are, we have no hope ofsolvingthem.
First, there is a looming enrollment deadline. How could it possibly
be fair for Medicare beneficiaries to pay a penalty ifthey don't enroll by
May 15^? How can anyone blame seniors ifthey have been either too
perplexed or too wary to enter the fi'ay? I spoke to a Medicaid eldercare
lawyer in Butler County, north ofCincinnati, abouttwo months ago who,
about a month and a half ago, who told me, as a Medicaid lawyer, that
she couldn't figure out this benefit for her mother. And why isn't the
Administration working with Congress to extend the enrollment
deadline?
It is pretty clear that that is just the tip ofthe iceberg. The biggest
problem with the new drug program is the program, itself Privatizing
prescription drug benefits for seniors never made sense and now it is
wreaking havoc. You know and I know that the problems dogging this
5
program aren't over, they are just beginning. Wait until seniors face
prior authorization requirements, driven not by medical necessity, but by
the bottom line. Wait until formularies change, premiums change,
deductibles change, co-pays change. Wait until drug plans drop out of
the program. Wait until seniors learn their neighbors one county over
have lowerpremiums. Waituntil seniors who pickthe bestplan forthem
on that day need another prescription, one that turns a right plan into the
wrong one. Andthese arejustthe coverage problems.
The financial issues are equally daunting. Genentech recently
announced that it plans to charge $100,000 for a year's worth of the
cancer drug, Avastin. The company didn'tbother to weave a story to the
R&D
media about recouping cost, Genentech simply said Avastin will
carve the best andwill cost $100,000 because that is what the marketwill
bear. The Medicare drug law prohibits the Federal government,
amazingly so, we all know this now, prohibits the Federal government
from negotiating drug prices. If Genentech wants to arbitrarily charge
$100,000 so it can generate billions in profits, why should taxpayers
have anything to say about it? Taxpayers contributed $45 million to the
development ofthis drug. Americans are being charged the highestprice
in the world for that drug and Medicare is not allowed to negotiate a
discounted price for that drug. We might as well eliminate the middle
man and give the drug industry a vote in Congress and a Cabinet
position.
Democrats have introduced legislation to eliminate the prohibition
on price negotiations. We have introduced legislation to extend the
We
penalty-free enrollment deadline. have introduced legislation to
rationalize prior authorization rules to dispense with mid-year formulary
changes and let seniors switch plans ifthe initial one turns out to be a
lemon. We have introduced legislation that goes back to the basics to
enable Medicare beneficiaries to bypass private insurance so they don't
spend all their time trying to figure out and compare 40 or 50 insurance
companybrochures, insteadto simply addMedicare prescription drugs to
their Medicare benefits package and no confusion, no drama,just a good
drugbenefit, the way we shouldhave done atthe beginning.
Numerous choices have been foisted upon seniors. It is time to give
themthe one choice they want. I spent the last six weeks traveling Ohio,
talking to pharmacists and seniors in Vandalia and Cincinnati and Lima
and Bowling Green and Toledo and Akron and Cleveland and Mansfield
and Columbus and Youngstown and one drug store, one pharmacist in
Norton, Ohio, a suburb of Akron, told me that Congress and the
president simply must have handed ablank legal pad to the drug industry
and said hey, write this bill for us, would you? It's never pleasant to
admit you were wrong, but it is worse to ride a dead horse. I hope my
6
Republican colleagues will decide it is time to focus on the well being of
Medicare beneficiaries andhelp us make this drugprogramwork. Thank
you, Mr. Chairman.
Mr. Deal. The Chair recognizes the Chairman of the full
committee, Mr. Barton ofTexas.
Chairman Barton. Thank you, Mr. Chairman, for holding this
hearing. I want to thankDr. McClellan for once again comingbefore the
subcommittee. It is always good to see a fellow Texan. I am looking
forward to hearing your perspectives. We also look forward to hearing
theperspectives ofthe panel that is goingto come afteryou.
Medicare is finally providing patients with prescription drugs after
years offalse starts, failed attempts, and endless debate. Congress finally
delivered on its promise and created a Medicare prescription drug
benefit. The result is not perfect. In fact, it is no secret that during those
negotiations and markups several years ago, I unsuccessfully sought to
make several changes when we debated the Medicare Modernization Act
of2003 in this very room. At the end ofthe day, however, I voted for
the bill, voted for it in committee, voted for it on the floor, and voted for
itin conference.
We negotiated a compromise that has created what we now call the
program. Medicare Part D. Where our critics before us had failed for 40
years, that Congress and now this Congress has delivered a Medicare
prescription drug benefit for millions ofsenior citizens. We are now in
the sixtieth day of this new benefit. Although you wouldn't believe it
from some accounts, more than five million seniors have enrolled in the
new Medicare prescription drug benefit plan. Another 20 million are
getting assistance in existing plans that Medicare is helping to subsidize
in some way. That adds up to 25 million seniors, andthey are signing up
atthe rate ofabout a halfa million a week. That sounds like a success to
me, not a failure.
The people that are signing up are saving money. Their monthly
premiums have dropped from an initial estimate of $37 down to about
$25 a month. CMS reports that the plans they are joining are doing
better than anybody expected to increase the use ofgeneric drugs and to
negotiate deeper discounts with drug manufacturers. The market works.
People are making choices and supplies are responding to market
competition. This is translated into real savings for Medicare
beneficiaries, meaning that they have been able to reduce their drug
spending by thousands of dollars on an individual basis on an annual
basis.
We are going to hear from some real beneficiaries today, including
one from my Congressional district, Mr. Marcus Hickerson, who I can
see out in the audience over on, unfortunately for me, on the Democratic