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MEDICARE PILOT TEST ON DRUG COVERAGE FOR CHOLESTEROL, OSTEOPOROSIS THERAPIES PROPOSED IN SENATE-PASSED TAX PACKAGE; R&D TAX CREDIT EXTENDED 18 MONTHS

Executive Summary

The Senate tax and economic stimulus package calls for Medicare demonstration projects on coverage of both cholesterol- lowering drugs and osteoporosis therapies. The package cleared the Senate on March 13. The demonstrations were contained in Sens. Bentsen (D-Tex.) and Durenberger's (R-Minn.) health insurance small market reform plan, which was added to the tax measure during Senate Finance Committee markup of the bill ("The Pink Sheet" March 9, p. 13). The bill would depart from Medicare's general prohibition against coverage of either outpatient prescription drugs or preventive care. Finance Committee Chairman Bentsen is a long-time supporter of preventive care in Medicare and also in maternal and child health programs. Specifically, the bill would require Medicare to conduct demonstration projects on the feasibility of expanding coverage to include "cholesterol screening and cholesterol-reducing drug therapies" and "screening and treatment for osteoporosis, including...hormone replacement therapy." Other services that would be studied include glaucoma screening and prostate cancer screening. In the tax area, bill would extend until Dec. 31, 1993 tax credits for increased corporate expenditures in research and development and for orphan drug research expenses. Absent congressional action, both tax breaks will expire on June 30, 1992. In contrast to the Senate's approach, the House tax bill would establish the R&D credit as a permanent tax incentive but provides no extension for the orphan drug credit. House staffers said they received little lobbying to renew the orphan credit, which committee members probably would have accepted in light of its relatively low price-tag. Both the House and Senate would provide an exemption for 50% of the capital gains on original stock purchases in a small business, providing the stock is held for at least five years and the company's aggregate assets are no more than $100 mil. The capital gains provision is supported by the biotechnology industry.
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