Excerpts from Remarks by

Billy Tauzin, President & CEO, PhRMA

Before the Blue Skies and Brickwork II: Making the most of the Medicare Prescription Drug Benefit
Lansdowne, VA
September 20, 2006

The Medicare Prescription Drug Benefit:
Meeting the Needs of Seniors, Providing Real Healthcare Choice

The story of how well implementation of the Medicare prescription drug benefit is going is good news for patients – especially seniors and the disabled – because today millions of Americans who once worried about the cost of their medicines and how they were going to afford them now have a drug benefit that provides real savings. More importantly, it is helping keep many seniors and disabled Americans healthy and healthier because they are getting and taking the medicines their doctors prescribed.

I say all of the time – and I mean it – a medicine that sits on the shelf helps no one.

The Medicare Prescription Drug Benefit is making an important difference in the lives of America’s seniors and the disabled.

Millions who struggled to pay for their medicines, millions who had no drug benefit and who worried about tough, costly healthcare choices are today, increasingly, experiencing peace of mind.

They know that they can get the medicines they need and they are realizing real savings on the costs of their medicines.

According to government data, 38.2 million Medicare beneficiaries now have comprehensive prescription drug coverage because of the program for the first time ever. That’s over 90 percent of the Medicare population. Last year it was estimated that only 24.3 million had comprehensive prescription drug coverage – that means there’s been a 57 percent increase in the number of patients now getting help paying for the medicines they need.

In 2006 – its first year of operation – costs have been far lower than projected, and CMS tells us that bids plans have submitted for 2007 are, on average, 10 percent lower than they were for 2006.

What CMS is telling us is that they are estimating the average premium for a Medicare prescription drug plan will be about $24 dollars a month for next year…that is 40 percent less than what they had projected last year for 2007.

And, because of how the drug benefit worked under real-world conditions during 2006 – the first year of the benefit – there’s been a 20 percent reduction ($180 billion) in the projected net total cost of the program to the federal government over the next 10 years. In other words, cost containment is working like we thought it would.

The data from CMS on Medicare Part D plans shows that rebates and discounts on the drugs seniors and the disabled buy are much larger than originally projected – increasing from 15 percent to 27 percent.

The average monthly dollar amount seniors spend on prescription drugs has fallen by 54 percent since the drug benefit went into effect and studies show that seniors reported paying on average about $64 a month for prescription drugs as of last July – a 54 percent drop from the $139 per month seniors reported paying in 2003.

Back in July, the Kaiser Family Foundation reported more than 80 percent of those enrolled in a Medicare drug benefit plan are satisfied with their plans and, based on results reported in August by Health Affairs, nearly 60 percent say the program is a “major benefit” for seniors.

According to a poll released by the Medicare Rx Network, 82 percent of beneficiaries said that they are satisfied with their prescription drug plan and 61 percent said they were saving money.

And one of the most important aspects of this benefit is choice.

The complaint has been that choice is confusing. But I ask you, if one-size fits all doesn’t work in medicine or health care, if everyone deserves to be treated as an individual when seeking health care and health advice, then why should we settle for one-size fits all when it comes to drug plans?

Every beneficiary is special, has special drug needs, and a wide array of plans makes it possible to better meet those individual needs.

Seniors and the disabled are being given real choices; choices that allow them to pick plans that meet their medication needs and that maximize their cost savings. That just simply makes sense to me as being good medicine and good healthcare.

And choice puts real competition into the process…and competition amongst benefit plans is what is providing real savings to patients and negotiating power over the price of medicines included in the plans.

The bottom-line is that the Medicare drug benefit gives Medicare beneficiaries the same kind of negotiating power that works for Members of Congress and 190 million other Americans.

Taking that choice away, it seems to me, could be viewed as relegating beneficiaries to a sort of second-class citizenship.

Believe me, I’ve been a patient. I am alive today because of choices in medicines and in doctors. I think that Medicare beneficiaries should have real choices over their healthcare and their medicines.

Going forward, whether we are talking about Medicare or our entire healthcare system, we should be led by the idea that choices are not only good for patients, they are what patients want and need.

Giving patients real choices, recognizing that they are individuals with individual needs and problems, should not only guide America’s pharmaceutical research companies, it should guide all of us – politicians, health care policy makers, doctors and patient advocates – in creating policies and solutions that work for patients..

That is what we are working for at America’s pharmaceutical research companies. That is why we have supported the Medicare prescription drug benefit. That is why we have worked in cooperation with so many organizations – like the Medicare Rx Education Network – to help patients take advantage of the benefit and make smart, informed choices that help them meet their healthcare and medication needs.