politics55.htm

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August 26, 2003

Dear Milt,

Thank you for contacting me. I am always glad to hear from you.

I share your concern about the high cost of prescription drugs. Prescription drug expenditures have grown by double digit rates almost every year. Far too many Americans, particularly seniors, have difficulty affording these medications. In fact, drugs are now the largest out-of-pocket health care cost for seniors and many other Americans. I've spoken to many Iowans who must spend hundreds of dollars on medications every month. Too often, people without prescription drug coverage are forced to forego necessities such as food or heat in order to have money for the medicine they need. That is simply not right.

I have worked for years to provide Iowans with a prescription drug benefit under Medicare that is comprehensive, voluntary, and affordable for all seniors. However, I was unable to vote for the recent prescription drug plan that passed before the Senate because it failed to provide these things, and put special interest over the interests of seniors. Instead, both the Senate and House prescription drug legislation are unreliable, unaffordable, complex and confusing, and leave seniors to pay the majority of their drug costs. I think seniors deserve more.

First, the prescription drug bill is unaffordable. Seniors would be required to pay at least $35 per month in premiums, a deductible of $275 per year, and 50% of drug costs. Seniors would have to pay 100% of their drug costs if they spend more than $4900 on drugs, even though they are still paying premiums each month! What's worse is that many seniors would actually lose money under the plan.

For example, a senior living on $15,000 a year with $1,000 in annual drug costs would be one of the approximately 35 percent of seniors who would pay money, yet receive no benefit.

Second, the bill is complex and bewildering. Seniors will be forced to wade through a bureaucratic maze of new rules and options. A vast majority of seniors - 89 percent - choose traditional Medicare because it is simple, reliable and guaranteed. The prescription drug bills will force seniors into private plans and HMOs, which can change their premiums each year, force seniors to change drugs, and can even quit providing benefits after a year, bouncing seniors from one plan to the next.

One of the most significant flaws in this legislation is that it takes the first step toward Medicare privatization. Scores of data shows that privatizing Medicare is not cost effective, nor is it what seniors want. The costs of marketing, salespeople, and expensive CEO salaries drive up the costs of providing a benefit under a private plan, costing billions of dollars more than if it were under traditional Medicare. Yet, this bill spends billions of taxpayer dollars to subsidize private health plans just to entice them to participate. These are billions of dollars that would be better spent on providing real relief to seniors.

The House version of the bill poses even more of a threat to Iowans because it offers no Medicare fall-back. Under the House plan, seniors in Iowa would be completely at the mercy of private plans and could be left with no drug coverage if private plans are unwilling to participate in the state. In the past, Iowa has been unable to attract private plans to offer Medicare benefits.

Last, this bill does little to contain costs. Prescription drug prices are skyrocketing out of control. This bill is a prize for the pharmaceutical companies, and does nothing to address the arbitrary way in which they set prices. Unfortunately this bill doesn't allow seniors to yield their purchasing power to negotiate lower prices on drugs.

However, you may be interested to know that in the bill I helped lead the effort to pass an amendment that would improve access to generic drugs. The average price paid per prescription for brand-name drugs is approximately three times the price of generics. Through this act, lower-cost generic drugs would be brought to the market faster, reducing prescription drug spending by $60 billion across the country over the next ten years.

In addition, I also supported another amendment that will allow pharmacists, wholesalers, and consumers to import drugs at a lower price from Canada. On average, brand-name drugs cost 38% less in Canada than they do in the United States.

I also strongly supported efforts to increase Medicare reimbursement for rural areas. As co-Chair of the Rural Health Caucus, I am urging conferees to deliver more funding to rural state like Iowa.

Despite a few victories, I opposed this bill because it puts pharmaceutical companies and HMOs ahead of seniors. This Legislation reflects priorities I do not share. The Congress and Administration passed $1.6 trillion in tax cuts for the wealthy, and yet left seniors with inadequate drug coverage. That is unjustifiable. Seniors deserve no less than the prescription drug benefits that Members of Congress receive, and I will keep fighting until we achieve this.

Again, thanks for sharing your views with me. Please don't hesitate to let me know how your feel on any issue that concerns you.

Sincerely,

Tom Harkin
United States Senator