U.S. Senator Tammy Baldwin Joins Effort to Protect Almost 147,000 Wisconsin Seniors & Reduce Deficit by $141 Billion

WASHINGTON, D.C – U.S. Senator Tammy Baldwin today joined 18 of her Senate colleagues to introduce legislation that reduces the deficit, better protects seniors’ health care, and reduces Medicare Part D drug costs for taxpayers by making sure that prescription drug companies no longer get more in profits than they are due.

The Medicare Drug Savings Act would save $141.2 billion, helping to responsibly reduce the deficit and avoid reckless proposals to cut Medicare benefits.

“The Medicare Drug Savings Act will help fix a broken system that prohibits the federal government from negotiating lower prescription drug prices for Wisconsin senior citizens,” said Senator Baldwin. “This a common sense solution that will produce cost savings and efficiencies in Medicare instead of windfall profits for drug companies. By allowing the government to obtain better prices on prescription drugs for seniors, we will save taxpayers money and strengthen Medicare. This legislation can help reduce the deficit in a way that keeps our promises to seniors instead of cutting retirement benefits that people have worked for and earned.”

The legislation would eliminate a special deal for brand-name drug manufacturers that allows them to charge Medicare higher prices for prescription drugs for some seniors and people with disabilities. According to the Center for Medicare and Medicaid Services, this includes almost 147,000 Wisconsin seniors. The bill would require drug companies to provide rebates to the federal government on drugs used by dual eligibles – people eligible for both Medicare and Medicaid, who are predominantly low-income seniors – just as was done for dual eligibles on Medicaid before Medicare Part D was created in 2006. 

With the exception of Medicare Part D, all large purchasers of prescription drugs negotiate better prices, including Medicaid, the VA, and private insurers. This bill simply restores negotiated prices for low-income Medicare beneficiaries.

This act would correct excessive payments to drug companies, while also saving taxpayers and the federal government from footing the unnecessary cost.  Over the past 10 years, the 11 largest drug companies alone took $711.4 billion in profits, including a 62 percent increase from 2003 to 2012. 

Background:

The Medicare Drug Savings Actwould reduce the deficit, saving taxpayers $141.2 billion over the next 10 years, according to the Congressional Budget Office.  Similar proposals were also included in the President’s most recent budget proposal and the President’s Commission on Fiscal Responsibility and Reform.

The legislation would require prescription drug companies to provide a rebate for drugs provided to almost 147,000 Wisconsinites eligible for both Medicare and Medicaid or otherwise eligible for the low-income-subsidy plan in the Medicare Part D Prescription Drug Program.  Drug manufacturers currently provide rebates for other Medicaid beneficiaries, and had previously provided the same rebates for dually eligible beneficiaries.

Before the Medicare prescription drug program was created in 2006, brand-name drug manufacturers paid rebates for dually eligible beneficiaries on Medicare and Medicaid. All dual eligibles’ prescription drugs were discounted by rebates negotiated by the federal government and some received additional discounts negotiated by state Medicaid plans.  But since Medicare Part D was created, drug companies no longer had to provide these rebates and they have been unfairly making more money off of prescription drugs for dual eligibles at the taxpayers’ expense. The bill retains incentives for drug manufacturer innovation and would not impose price controls.