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Medicare

Medicare drug plan is profit windfall for drug companies

Friday, September 22, 2006 by: Jessica Fraser
Tags: medicare, drug prices, pharmaceutical companies


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(NewsTarget) After a report by J.D. Power and Associates revealed that three-fourths of more than 3,400 Medicare beneficiaries surveyed were satisfied with the new Medicare prescription drug plan that went into effect at the beginning of the year, a report by House Democrats has found that the pharmaceutical industry has shown a boom in profits since the program's inception.

The J.D. Power report found that 45 percent of seniors on Medicare who were surveyed between June and September were "delighted" with their coverage under the new plan, and 30 percent reported they were "pleased," which spells good news for Republicans in upcoming midterm elections.

In response to the J.D. Power report, House Democrats drafted a report of their own: The "Democratic Truth Squad" report, authored by the House Government Reform Committee's (GRC) Democrats. The Democrats' report found that the nation's top 10 pharmaceutical companies -- which lobbied hard for Congress to pass a Medicare plan to their satisfaction -- enjoyed an increase in profits of more than $8 billion during the first six months of the new program, a 27 percent increase over profits over the same period in 2005.

The controversial program -- which got off to a rough start when millions of seniors had difficulty signing up or were denied prescriptions because of computer glitches -- does not allow Medicare to bargain with drug companies for lower prices. The Republican-controlled Congress that drafted the plan said marketplace competition would naturally keep prices down, though the Democrats' report claims "there has been little evidence of declining prices."

The report also claims that because 6.1 million low-income seniors who formerly received their drugs through Medicaid have now been transferred to the new Medicare program -- which, unlike Medicaid, is not required to offer recipients "best prices" -- the pharmaceutical industry stands to make an extra $30 billion over the next decade.

Rep. Harry Waxman (D-Calif.), the GRC's top Democrat, says the new Medicare program is "a multibillion-dollar giveaway to the drug companies."

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