Compromise Medicare Rx Benefit Will Be Next Step For Senate, Daschle Says

Compromise Medicare drug benefit language will be negotiated once the Senate rejects the current Rx proposals, Senate Majority Leader Tom Daschle (D-S.D.) predicted.

Daschle told a July 18 press conference that he does not expect either the Republican-backed "tripartisan" or the Democrats' Medicare drug benefit proposals to get the needed 60 votes for adoption. Both bills are scheduled for a July 23 vote in the Senate.

However, the bills' failure on the floor is a prerequisite to getting Democrats and Republicans together to craft a compromise bill, Daschle suggested.

"There has to be some resolution on that initial proposal before you can engage in a meaningful way to look at something else," he said. "I would like to think you could avoid that, but I think the Republicans want to vote on their bill, and I know that" Democratic bill sponsors "feel very strongly about all the work and effort they've put into their bills," he added.

There are "maybe eight to 10 Senators...on both sides of the aisle who are exploring ideas" on compromise, Daschle said. "They feel that there is some progress being made."

"We're going to have to find a way to bridge the differences that exist at this point," he continued. "I will do whatever it takes to see that we're successful."

The Senate began debate on Medicare legislation July 18. In addition to the Grassley/Breaux/Jeffords (S 2) and Graham/Kennedy (S 2625) bills, a third Senate Medicare bill by Sens. Chuck Hagel (R-Neb.) and John Ensign (R-Nev.) could also be considered.

The Hagel bill (S 2736), introduced July 16, would give Medicare beneficiaries the option of enrolling in a private drug discount card program and would provide catastrophic coverage on a sliding scale depending on income. Seniors below 200% of poverty, for instance, would have an out-of-pocket cap of $1,500; those with incomes between 200% and 400% of poverty would receive catastrophic coverage after $3,500 in drug expenditures.

The tripartisan bill, introduced July 15, has been modified to provide a more generous benefit since a draft was floated earlier in the month (¹ (Also see "Senate “Tripartisan” Medicare Rx Drug Bill To Have 50% Copay, $35 Premium" - Pink Sheet, 8 Jul, 2002.), p. 7).

Under the bill, seniors would pay a monthly premium of about $24, down from the previous $35 estimate. Government cost-sharing would be provided for up to $3,450 of drug costs, and the catastrophic level would be $3,700 (formerly $2,000 and $4,500, respectively). The bill sponsors said the changes were based on lower-than-expected Congressional Budget Office estimates.

The Medicare bills are being debated as amendments to McCain/Schumer generic drug legislation, taken up by the Senate on July 15. Republicans chided the Democratic leadership for bringing up the issue on the floor without waiting for a Finance Committee markup of a Medicare bill.

If a bill had passed out of committee, its chances for floor passage would have improved because a simple majority vote would have been required to adopt the amendment rather than the two-thirds threshold.

Daschle said McCain/Schumer "serves as a very important vehicle" for Medicare legislation, particularly given estimates that it will save the government $60 bil. over 10 years, which could be "applied towards the benefit package," he said.

"There's not only an overall savings-for-the-American-people factor, but there's also savings for the Medicare benefit that ought to be calculated."

Overall, Daschle predicted that the underlying generic drug bill would pass with "strong bipartisan support," regardless of what happens in the Medicare debate.

McCain/Schumer was marked up and reported out of the Senate Health Committee July 11 with a 16-5 vote. The amended version adopted by the committee, which was proposed by Sens. John Edwards (D-N.C.) and Susan Collins (R-Maine), would allow generic challenges to patent listings in the "Orange Book" and would provide brand companies only one 30-month stay on certain patents (² (Also see "Senate Generic Rx Bill Would Allow Challenges To “Orange Book” Listings" - Pink Sheet, 15 Jul, 2002.), p. 3).

Despite the bipartisan passage by the Health Committee, the White House is voicing opposition to the legislation.

In a July 18 "Statement of Administration Policy," the White House took a position similar to that outlined by the brand name drug industry. The Administration "opposes S 812 in its current form because it will not provide lower drug prices," it said.

"S 812 would unnecessarily encourage litigation around the initial approval of new drugs and would complicate the process of filing and protecting patents on new drugs. The resulting higher costs and delays in making new drugs available will reduce access to new breakthrough drugs."

The Administration's statement also echoed a comment made on the floor by Senate Judiciary Chairman Orrin Hatch (R-Utah), one of the sponsors of the original Waxman/Hatch legislation that McCain/Schumer would change.

"I am troubled by the fact that we basically have a bill emanating from the [Health] Committee that centers on patent law, civil justice reform, and antitrust policy," Hatch said. "The way the Judiciary Committee was effectively cut out of the process is a matter of great concern to me."

The White House agreed that "clearly, the bill would benefit from consideration by the Senate's experts on Hatch/Waxman law on the Judiciary Committee, the proper committee of jurisdiction for the bill."

The White House statement also expressed support for the tripartisan bill and opposition to Graham/Kennedy.

As he did during the Health Committee markup, Sen. Bill Frist (R-Tenn.) noted in floor debate the concerns of the Biotechnology Industry Organization about a provision on bioequivalence.

Although bill sponsors say they intend the language to simply affirm FDA's authority to decide on an acceptable BE standard, Frist noted that BIO is concerned that the provision would actually weaken the standard, opening the door to non-equivalent, potentially unsafe generics.

In a July 15 letter to Health Committee Chairman Edward Kennedy (D-Mass.), BIO states that the BE section "as currently drafted goes far beyond the intended purposes of the provision" because it "makes it impossible for drug manufacturers, whether pioneer or generic...to challenge improper standards enacted by" FDA.

The Senate has already agreed to several amendments to the generics bill, including drug reimportation and states' use of Medicaid rebates to reduce drug costs of non-Medicaid eligibles (see ³ (Also see "Senate Medicaid Supplemental Rebate Amendment May Block PhRMA Suits" - Pink Sheet, 22 Jul, 2002.) ).