JOHN GLENN, Ohio SPECIAL COMMITTEE ON AGING DAVID PRYOR, Arkansas, Chairman BILL BRADLEY, New Jersey HERBERT KOHL, Wisconsin JOHN HEINZ, Pennsylvania PETE V. DOMENICI, New Mexico NANCY LANDON KASSEBAUM, Kansas PORTIA PORTER MITTELMAN, Staff Director FOREWORD On July 11, 1989, Congress learned that the Congressional Budget Office (CBO) would soon significantly raise its cost estimate for the new Medicare Catastrophic Coverage Act (MCCA) prescription drug benefit. As a result, many observers now believe that the Congress will not be able to lower premiums for the benefits included in the Act. Moreover, because of the CBO estimate, some Members of Congress have advocated delaying or eliminating the Medicare outpatient drug benefit. The prescription drug benefit included in the MCCA is viewed by many to be its most important provision, soon to help 9 million older Americans annually to pay drug bills. Prescription drug costs represent the largest out-of-pocket health care expense for three of every four older Americans. It is therefore not surprising that over 15 percent of the elderly patients who require prescriptions report they are unable to pay for their medications. In light of this cost burden, proposals to reduce insurance protection against the cost of prescription drugs greatly concern older Americans and their advocates. Furthermore, during the last decade, health policymakers of both political parties have concluded that it is both more constructive and compassionate to attempt to address the reasons behind rapidly increasing health care costs than to simply deny benefits to those in need. The Special Committee on Aging hearing of July 18, together with this staff information paper, represent an attempt to target the reasons` behind prescription drug cost increases. This staff report summarizes the findings of the Committee's investigation into prescription drug costs, drug price differentials in domestic and international markets, the relative value of products resulting from drug research and development, and the prices the Medicare program will be paying for its new coverage of prescription drugs. It is my hope that this information will help interested parties better understand the prescription drug industry and the difficulties of controlling prescription drug price increases. As is the case in most detailed inquiries into a subject, the information that has been gathered leads us to ask additional questions. I intend to hold additional hearings on this subject to help the Congress evaluate options for efficiently providing the oldest and poorest Americans with protection from the high cost of prescription drugs. David Pryor Chairman, United States Senate (III) |