PhRMA Statement on Medicare Prescription Drug Program

Washington, D.C. (September 26, 2008) — Pharmaceutical Research and Manufacturers of America (PhRMA) Senior Vice President Ken Johnson issued the following statement today on the Medicare prescription drug benefit:

“A recent analysis of Medicare Part D premiums for 2009 for a select group of insurers offers a misleading representation of the value the program provides for millions of seniors and disabled Americans.

“Clearly, the Medicare drug program is working well. More than 90 percent of Medicare-eligible Americans now have comprehensive prescription drug coverage – and they have a wide array of affordable drug plan choices within the benefit.

“In fact, in 2009, approximately 97 percent of beneficiaries in a stand-alone plan will have access to a monthly premium less or equal to the premium they paid in 2008, according to the Centers for Medicare and Medicaid Services (CMS). Next year, every state will offer a Medicare prescription drug plan with a premium of $23 or less – and in all states but one, Part D enrollees will have access to at least one plan with a premiums less than $20 a month.

“In addition, 93% Medicare Part D beneficiaries have access to Medicare Advantage drug plans that offer $0 premiums and $0 deductibles. Also, nearly 10 million seniors are receiving drug coverage for little or no cost through the low-income subsidy benefit – and millions more are eligible for this help.

“Strong competition among drug plans participating in the benefit has led to lower-than-projected premiums for standard Part D coverage. In 2009, the average premium paid by beneficiaries is expected to be $28 – only $3 more than last year – and 36 percent lower than the $44 originally projected, according to CMS.

“Along with unprecedented choices in their drug coverage, seniors are saving money on their medicines through the program, particularly those who need it the most. On average, beneficiaries will continue to save $1,200 on their medicines in 2009, and the average total value of Part D subsidies for low-income beneficiaries will be $3,900 next year, according to CMS.

“In fact, four recent independent polls conducted by the Wall Street Journal/Harris Interactive, the Medicare Rx Education Network, AARP and Medicare Today demonstrate that a large majority of seniors – between 65 percent and 75 percent – are saving money on their medicines. And more and more seniors are benefiting from their Medicare drug coverage, as a higher percentage of seniors reported saving money in 2007 than in 2006, the polling data show.

“Not only are Medicare beneficiaries saving significant money, so too are American taxpayers. In March 2008, the non-partisan Congressional Budget Office (CBO) released new baseline spending projections that further reduced its 10-year forecast for the total cost of the prescription drug program by $438 billion, or 37 percent, compared to its 2006 estimate for the same 10-year period (FY 2007-2016).

“Some critics of the benefit contend prescription drug spending is leading to increased premiums. However, according to the most recent figures from IMS Health, growth in prescription drug spending has slowed to historically low rates - an annual rate of just 1 percent for the 12 months ending July 2008.

“Moreover, overall prices for Part D-covered medicines are stable. A recent analysis by CMS shows that the vast majority of Part D enrollees are enrolled in plans in which the price for medicines did not change more than 3 percent.

“Also contributing to the lower-than-expected program costs and savings to beneficiaries is the high rate of generic drug utilization within the program. PhRMA believes that patients should receive the medicines that are best for them, based on their doctor’s judgment, including both brand-name medicines and generic drugs. According to IMS Health, nearly seven out of every 10 prescriptions in America are now filled with a generic drug.”