Report reignites debate over Medicare drug plan

A report comparing drug prices under Medicare's temporary prescription discount card with those charged by the Department of Veterans Affairs has reignited a debate over whether the Medicare prescription benefit that takes effect Jan. 1 favors big pharmaceutical companies.

Families USA, a Washington healthcare advocacy group that has repeatedly sparred with the government on issues related to the new drug benefit, said it found that 49 of 50 common prescription drugs could be obtained at lower prices from the VA department than through the discount card.

For example, it said the VA provides the cholesterol drug Lipitor for $498.84 a year, compared to $730.56 under the Medicare discount.

The drug discount card program, which expires in January, was a stopgap measure designed to provide price relief for seniors.

It began in 2004 after the federal government passed the Medicare Modernization Act, which contains the permanent drug benefit.

The Modernization Act was criticized by some because it prevents the government from negotiating bulk prices with manufacturers. Instead, each individual provider, such as health plans and pharmacy benefits companies, must negotiate separately.

Ron Pollack, executive director of Families USA, said the comparison of the drug card plan with the Department of Veterans Affairs, which does negotiate prices in bulk, shows the advantages of government purchasing power.

''The reason we compared the drug cards with the VA is it's the best example of what can be achieved when a public agency negotiates to get cheaper pricing," said Pollack. ''It's that kind of negotiation that the pharmaceutical lobby and others who profit from the current, Balkanized system object to."

The backlash to the report from the drug industry was intense.

The Pharmaceutical Research and Manufacturers of America, the industry's main trade group, said Pollack was making an unfair comparison. It accused him of using ''scare tactics" to undermine the new drug plan, which is the most significant change to Medicare in its 40-year history.

''It's a shameless publicity stunt," said Ken Johnson, senior vice president of the group, in a statement.

The Pharmaceutical Care Management Association, a group that represents firms that provide third-party pharmacy benefits to health plans and others, said Pollack's approach ''would severely limit seniors' access to drugs and result in a massive cost-shift to the private sector."

Even with lower prices through Medicare negotiations, Pollack said, the drug industry would remain ''one of the most profitable" in the United States.

The report comes as scores of companies are preparing to unveil details of their prescription drug plans under the new Medicare benefit.

The Centers for Medicare and Medicaid Studies, or CMS, the federal agency that administers the plan, said last week that 17 stand-alone drug plans will be offered in Massachusetts.

In addition, six companies will offer drug coverage as part of larger Medicare Advantage plans.

The government said that the number of choices, along with monthly premiums that are lower than initially expected, shows it is better to have many providers compete for members.

''Medicare's drug coverage is coming in significantly less than independent analysts predicted," said Gary Karr, a spokesman for CMS.

He added that having the government negotiate drug prices for all Medicare beneficiaries would not necessarily result in lower prices.

David Kreling, a professor of pharmacy marketing and economics at the University of Wisconsin-Madison, said Families USA's comparison with the VA's drug-purchasing strategy might not be valid.

''I'm not sure it's an appropriate comparison," said Kreling. ''The VA gets some very, very special pricing because they're a special class of customers. They are very much below market rates. If such prices were extended to a large group of patients, that's not a sustainable proposition."

Pollack, the executive director of Families USA, said he's not trying to discourage seniors from signing up for the new drug benefit.

But he said he would continue to monitor prices as more details become available.

''We want the program to be more cost-effective," he said. ''In the next few weeks, we'll issue a new analysis that looks at the prices secured through these private plans and how they stack up to the VA prices."

Jeffrey Krasner can be reached at krasner@globe.com.