Congress looks at drug costs for senior citizens

Congress is set to start debate in earnest this week on prescription drug legislation that would help seniors meet their soaring drug bills.

Congressional leaders aim to pass a bill by the July 4th recess.
But while the legislation would treat the symptom of a national problem - painfully high drug prices for senior citizens on fixed incomes - it wouldn't deal with the underlying causes by stemming a persistent upward trend in drug prices and health care spending overall.

The growth in health care spending threatens to leave the Medicare program short of funds in about a decade, even without a drug benefit. Moreover, the impact of the rise in spending reaches beyond seniors. Workers are being socked with higher health insurance premiums and co-payments. Employers, facing the prospect of ever-higher health insurance costs, are more reluctant to add staff. Increasing numbers of the poor are unable to afford any health insurance at all.

Neither Congress nor President Bush seems willing to tackle the fundamental issue of rising health care spending anytime soon. It's easier to give citizens money to help them pay the bills than to try to curb the spending growth itself.

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Passage of a Medicare prescription drug benefit is far from guaranteed, however.
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The Senate will take up the issue first, with the Finance Committee considering a proposal this week to introduce a voluntary Medicare drug benefit in 2006. Seniors would pay $35 a month for coverage that would pay half of their annual prescription costs up to $3,450, after a $275 deductible. It also would provide catastrophic coverage, paying 90 percent of an individual's drug bill over $5,300.

With the 2004 election on the horizon, lawmakers are eager to help seniors, a key voting bloc. President Bush plans a speech on Medicare and drugs on Wednesday in Chicago. Still, disagreements on the specifics of a drug benefit, both within Congress and between the White House and Congress, could block a final deal.
Drug spending is just one slice of health care costs, accounting for about 11 percent of the total. The largest component is hospital spending, which makes up roughly 31 percent.

Drugs' share is rising rapidly, though. In 1990, it stood at 6 percent; by 2010, it's projected to reach 14 percent, according to the federal Centers for Medicare and Medicaid Services. The hospital portion will edge down to under 29 percent by then.

A look at drug spending illustrates the upward trend in health care costs, and why it won't prove easy to curb.
Prescription spending totaled $141 billion in 2001, a 16 percent rise over the previous year and the third straight year of explosive growth. Final numbers aren't in for 2002, but the growth appears to be moderating. Still, the Centers for Medicare and Medicaid Services project average annual increases of 11 percent for the next several years, pushing the total for drugs to $373 billion in 2010.

How much of that growth is justifiable is the subject of heated debate. The U.S. population is aging, and older people use more drugs. Also, new drugs are available to treat diseases that previously didn't have effective drug treatments.
Sometimes, pharmaceuticals save money by enabling patients to avoid more costly hospital treatments.
But the pharmaceutical industry also has come under fire for questionable practices that boost drug spending.
Some drug companies have exploited loopholes to extend patent protection on their drugs, keeping cheaper generic competition off the market for years.

Further, a loosening of restrictions on advertising in 1997 has unleashed a wave of television and print ads for brand-name drugs. Anecdotal evidence suggests the marketing has driven up demand for the most popular drugs, when cheaper alternatives might have sufficed.

Still, researchers to date have not been able to sort out how much of the spending growth reflects unnecessary use.
"There's little doubt direct-to-consumer advertising has played some role in the increase in the number of pills prescribed, but the magnitude of that is very unclear," said Steven Findlay, the director of research at the National Institute of Health Care Management, a research group in Washington, D.C.

His studies also indicate that more Americans are being diagnosed with chronic diseases, and more drugs are being developed to treat them.

Doctors with improved tools and knowledge are better able to diagnose certain diseases. Finally, poor health habits mean Americans are sicker. Increasing obesity, for example, appears to be behind a rise in the number of diabetes patients.

Layered on top of that is a flood of new and often widely advertised drugs to treat chronic conditions, everything from Lipitor to reduce cholesterol and Vioxx to treat arthritis to Prozac for depression and Viagra for erectile dysfunction.
The result: Doctors gave out 1.46 prescriptions for every patient visit in 1999, up from 1.09 prescriptions in 1985, a 34 percent increase. And those numbers are likely to grow.
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