Lawmaker Inquiry May Bump Medicare Costs
By KEVIN FREKING, Associated Press Writer
WASHINGTON -- A lawmaker's inquiry could slightly increase the cost of the Medicare drug benefit if its results are publicized, congressional auditors said Tuesday.
Rep. Henry Waxman, D-Calif., has asked several insurers sponsoring Medicare drug plans to submit information about price concessions they wring from drug manufacturers. That pricing information is given to the Centers for Medicare and Medicaid Services, but cannot be disclosed.
Waxman's request has pharmaceutical companies worried, though he has not said what he would do with the information once he gets it.
The Congressional Budget Office estimates that disclosing the discounts means the cost of the drug benefit would likely increase by less than $10 billion over a 10-year period, and possibly much less.
The program is expected to cost about $45 billion this year alone.
Under the drug program, manufacturers typically give insurers a discount if they agree to cover a particular drug for their customers. The manufacturers would be less likely to offer the large rebates if they had to provide it to other types of insurance plans in the private sector, which would increase costs for the government and for enrollees, auditors said.
The publication of the prices also could encourage "tacit collusion" among the manufacturers of comparable medicines, they said. Such collusion occurs if drug makers offer similar discounts rather than trying to outdo each other in their pricing.
The CBO had originally projected in 2003 that disclosing discounts would increase the cost of the program by $40 billion over 10 years. The CBO lowered its estimate, in part, because Medicare plans are not getting substantially different discounts than what commercial plans get. The CBO had originally projected that Medicare plans would get substantially larger discounts, but the difference has been narrower than expected.
Two Republicans, Reps. Joe Barton of Texas and Jim McCrery of Louisiana, requested the CBO analysis.