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Medicare caveat

TOMMY G. Thompson has reservations about the Medicare prescription drug bill that he helped push through Congress at the behest of President Bush. His concerns emphasize a major weakness of the bill, which Bush signed a year ago today, but which will not become apparent until the drug benefit is fully in place next year.

At a press conference Friday announcing his resignation as secretary of health and human services, Thompson mentioned the passage of the bill as one of his great achievements. But he added in response to a question about disappointments: "I would have liked to negotiate," or bargain with pharmaceutical companies over the price of prescription drugs.

Thompson, a pragmatic Republican, is familiar with such negotiations from his 20 years in the Wisconsin Legislature and 14 years as governor. As HHS secretary during the 2001 anthrax scare, he negotiated the price of the antibiotic Cipro down from $1.77 to 95 cents a tablet.

The drug companies do not want to negotiate with any government official about what to charge for their products under Medicare. Too much like price controls, they argued. Just to make sure the government wouldn't use its clout to get lower prices, they made sure that the bill imposed a layer of private benefit managers between them and the Centers for Medicare and Medicaid Services, the HHS subdivision that oversees the benefit.

No one knows the exact discounts these managers will be able to negotiate or the amount of drugs that the elderly will be able to afford with all the loopholes and deductibles that the new law includes. The law is sure to cost more than the $400 billion over 10 years that Bush initially projected. The latest estimate from the centers is $534 billion. The Washington Post reported in September that the figure could go $42 billion higher.

Tony Jewel, a spokesman for the secretary, said this week that Thompson wants to give the law a chance to work before making any changes. It will take effect Jan. 1, 2006, and many elderly will be shocked by the out-of-pocket payments built into the law to keep down the cost to government. They will be right to seek better reimbursements from Congress, but that will put an added financial burden on Medicare just when it is needs to prepare for the baby boomers' retirement.

At his press conference, Thompson called the Medicare drug benefit a wonderful law. But it will only be a success if it delivers a reasonable benefit without impoverishing the elderly or taking excessive funds from the government. If pharmacy benefit managers cannot keep down the price of drugs, Republicans like him ought to push Congress to allow the federal government to get directly involved. 

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