Running head: IMPACT OF PRESCRIPTION DRUG ACT 1

Impact of Prescription Drug Act

Julianna Brauchle

Cedar Crest College

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One of the many ongoing debates in the healthcare field includes the Medicare

Prescription Drug, Improvement, and Modernization Act of 2003. Part of this act includes

Medicare Part D. This debate is not new; it has been ongoing since the Medicare program was

enacted in 1965.

There have been plenty of missed opportunities over the years for a prescription drug

benefit. In the original bill that the Ways and Means Committee drew up, and President Johnson

later supported, the prescription drug benefit that was to be covered in Part B of the Medicare

program was dropped due to the potential high costs of the program (Oliver, Lee, Lipton 2004).

Although there was plenty of support for this potentially helpful benefit, the opportunity ended in

failure. There was an optional outpatient prescription drug benefit, and many states proposed to

offer it when they actually put their Medicaid programs into effect (Oliver, Lee, Lipton 2004).

While the argument was that the potential costs were too high to include a prescription

drug benefit, and that the costs were too unpredictable, the argument was completely invalid. It

was, in fact, hospital costs that were unpredictable and potentially high (Oliver, Lee, Lipton

2004). The proportion for national spending on prescription drugs in the 1960s was about 10

percent, and is about the same now, only increasing to 11 percent (Oliver, Lee, Lipton 2004).

President Johnson had no intentions of expanding the Medicaid program, so he sent out a

task force to carefully analyze the spending on prescription drugs. He did this to lessen the

pressure on himself to add a prescription drug benefit. What they found was that the

expenditures, use, and price of out-of-hospital prescriptions had rapidly increased from 1950 to

1965 (Oliver, Lee, Lipton 2004). Each of these categories had all but doubled in those years, and

it was also found that the prescription drug use almost entirely fell on the elderly, who actually

incurred 47 percent of the costs (Oliver, Lee, Lipton 2004). Due to these findings, it was hard to
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justify expanding this portion of the Medicare program coverage to patients outside of the

hospital, but all in all the official Task Force on Prescription Drugs found that it was

economically and medically feasible to administer this program to the elderly, because it was

very much needed (Oliver, Lee, Lipton, 2004). The task force recommended that there should be

at least consideration towards providing coverage at the outset primarily for the drugs that are

most likely essential in the treatment of seniors’ illnesses. These recommendations were

disregarded, however, and an expansion of the Medicare coverage to include out-of-hospital

medicine was not again seen as an independent issue until 30 years later (Oliver, Lee, Lipton

2004).

After many reforms to the Medicaid bill had already taken place, President Bill Clinton

proposed the health security act, which would add an outpatient prescription drug benefit to the

Medicare program in 1993 (Oliver, Lee, Lipton 2004). This was a good attempt at good policy

making, it would be difficult to guarantee health benefits and drugs to Americans under the age

of 65, but not to do the same for those older Americans and the disabled, who needed the

prescriptions more. Clinton’s plan, along with other major proposals for health reform, were

stuck down by September of 1994 due to conservative attack and also special interest groups

(Oliver, Lee, Lipton 2004).

Again in 1999, President Clinton proposed yet another plan for a voluntary outpatient

prescription drug benefit available to all Medicare beneficiaries. This would not be listed under

Part D as a drug benefit premium, which would provide subsidies for low-income beneficiaries

with incomes below 150 percent of poverty. This differed from the plan he proposed in 1993 as

part of the health security act. It differed because now the participants would receive prescription

drug benefits through their existing health plans or through regional pharmacy benefit manager
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operated by health insurers, states, retail drug chains, or other qualified entities (Oliver, Lee,

Lipton 2004). Unlike the earlier proposal, this relied on the private sector’s management and

competition to control cost, leaving out direct governmental regulation (Oliver, Lee, Lipton).

In 2001 the Bush administration added a plan for Medicare beneficiaries to purchase

prescriptions at a discounted rate through private pharmacy managers. This program would

negotiate prices with manufacturers and pass along the savings to their cardholders. It was

argued that the program would help seniors immediately in the process of a Medicare drug

benefit being designed. This initiative was stalled when the courts found that the administration

had no legal grounds for the drug discount program and that Congress had failed to endorse any

from of drug assistance (Oliver, Lee, Lipton 2004).

Then, in 2003, President Bush decided not to propose detailed legislation. Instead, he

decided to offer only the general structure of Medicare reform, and he incorporated prescription

drug coverage in an effort to increase Medicare’s reliance on private health plans. Then,

President Bush announced his new framework to modernize and improve Medicare. All

beneficiaries would receive a drug discount card, and those enrolled in traditional fee-for-service

Medicare program would receive “catastrophic: coverage for annual prescription drug costs

above an unspecified amount (Oliver, Lee, Lipton 2004). In June of 2003, the Senate Finance

Committee came forward with a bipartisan agreement that helped break the four-year-old

deadlock over Medicare prescription drug coverage. the bill passed out of committee on June 13

by a margin of 16 to 5 with substantial amount of both parties. As in President Bush’s proposal,

the Senate package limits the total outlay to $400 billion over ten years, so there would be

similar gaps in coverage (Oliver, Lee, Lipton 2004).

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On November 15, 2003 the conferees reached agreement on a new version, the Medicare

Prescription Drug, Improvement, and Modernization Act of 2003. It included many of the

features that had come to be widely accepted in earlier proposals, such as a discount card,

additional assistance for low-income beneficiaries, a substantial gap in benefits for individuals

with high drug costs, and the use of private pharmacy benefit managers in lieu of direct

governmental regulation (Oliver, Lee, Lipton 2004). Most importantly, it required most

beneficiaries to choose between maintaining any existing prescription drug coverage or joining

the new Medicare Part D program beginning in January of 2006 (Oliver, Lee, Lipton 2004).

In summary, the Medicare Prescription Drug Act was completely necessary for many

older Americans. Many of these older Americans can’t afford to follow their doctors’ orders

when it comes to taking prescription medications. These drugs are just too expensive, which

leads to their health problems being untreated. Then, the physicians experience similar worries

and frustrations with the cost of the medications as they must choose between the practice they

choose to go with, whether it be evidence-based or practical for their patients (Brinckerhoff,

Coleman 2005).

The debate lies within the cost of spending on prescription drugs. The debate is on the

financial impact of this legislation on patients, physicians, and the Medicare system as a whole

(Brinckerhoff, Coleman 2005). The potential savings for patients comes at a high price to

American taxpayers. It is proposed that the prescription drug benefit will cost $720 billion over

the next ten years (Brinckerhoff, Coleman 2005). Congress made a statement claiming that

funding for prescription drugs has taken precedence over funding for other potential Medicare

reform measures (Brinckerhoff, Coleman 2005). While a compromise is necessary when there is

a limited pool of money, the more dollars spent on drugs means that less dollars and attention is
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paid to other health care priorities. The new legislation provides reimbursement for an initial

preventative physical exam, as well as screening for cardiovascular disease, and diabetes in high-

risk individuals.

The number of Medicare beneficiaries continues to rise and the amount of current drug

coverage available is steadily decreasing. This is a big problem. There are other consequences,

too, such as the law directly impacting the physician-patient relationship. I personally think that

at this point, the consequences outweigh the triumph of this law. We are losing the availability of

coverage rapidly, due to the fact that the amount of beneficiaries is increasing, especially since

the baby-boomer generation is retiring soon. It is important that this program remain voluntary. It

is also important that patients continue to pay at least some form of this program out of pocket,

because the more people there are over the age of 65 utilizing this great program, but the less

government money available for those who need this program. The legislation can also affect the

physician-patient relationship, meaning that there will be less time to discuss other topics on the

physician’s agenda because the physician has to explain new drugs and the Medicare benefit, and

what it will and will not cover. This is not good because many of these elderly patients have

multiple chronic conditions.

All in all it is important to have this legislation, because it helps the elderly pay for

medications that are necessary to their conditions. It is important to figure out a way to keep this

benefit affordable and available. While it is unclear how to solve this issue completely, it is

important to solve it in an effective way.

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References:

Brinckerhoff, J., & Coleman, E. A. (2005, March). What You Need to Know About the Medicare

Prescription Drug Act. Retrieved June 24, 2015 , from AAFP:

http://www.aafp.org/fpm/2005/0300/p49.html

Oliver, T. R., Lee, P. R., & Lipton, H. L. (2004, June). A Political History of Medicare and

Prescription Drug Coverage. Retrieved June 24, 2015, from NCBI:

http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2690175/