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NAMI E-News August 1, 2002 Vol. 02-90
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Senate
Passes Prescription Drug Legislation
Senate Passes Prescription Drug Legislation; Fails To Reach Agreement on
Medicare Outpatient Drug Benefit
After more than two weeks of contentious partisan debate, on July 31, the Senate
completed prescription drug legislation action, without agreeing on a plan to
expand the Medicare program to add coverage of prescription drugs. Over the past
week, the Senate rejected four separate proposals that would have added a drug
benefit to Medicare. While several of these plans were able to secure the
support of a majority of senators, none were able to get the 60 votes that were
required to waive budget rules (the Senate budget resolution limits available
spending on Medicare prescription drug coverage, and a waiver was required for
any proposal above this limit).
The Senate's failure to agree on a Medicare prescription drug benefit is a major
setback for efforts to fill the largest gap in the program's benefit package -
and a major concern for Medicare beneficiaries with severe mental illness (both
the elderly and non-elderly people with disabilities eligible for SSDI). While
there is wide bipartisan support in Congress for adding prescription drug
coverage to the program, Republicans and Democrats remain far apart on key
issues such as how a benefit should be delivered and whether to target coverage
to only those beneficiaries with high drug costs. Democrats generally favor a
benefit within the current structure of Medicare, while Republicans generally
favor subsidizing private health plans that would sell coverage to
beneficiaries.
Among the plans that the Senate debated, but failed to pass were:
 | Graham-Miller-Kennedy - This plan was sponsored by Senators Bob
Graham (D-FL), Zell Miller (D-GA) and Edward Kennedy (D-MA). It would have
added a drug benefit directly within Medicare and would have cost $594 billion
for 10 years, before expiring in 2010. The plan had no deductible, and
included subsidies for beneficiaries at, or below, 150% of poverty, as well as
"stop loss" coverage above a $4,000 threshold. This plan also included
provisions that would have allowed Medicare plans to use a formulary that
relies on a single medication within a given therapeutic class (e.g., atypical
antipsychotic medications), barred more than two medications within a given
class and authorized higher copayments for off-formulary medications. The
Graham-Miller-Kennedy plan received 52 votes, below the 60 votes that were
required to waive budget rules. |
| Tripartisan - This plan was sponsored by Senators Charles Grassley
(R-IA), John Breaux (D-LA) and James Jeffords (I-VT). It would have provided
coverage through private drug plans at a cost of $370 billion over 10 years,
with no sunset in coverage. It would have charged a $250 annual deductible,
with a 50% copay for costs up to $3,200 and 100% coverage for expenses above
$3,450 (until out of pocket expenses reached $3,700). Low-income subsidies
would have been available for beneficiaries below 135% of poverty, with
subsidies phased out for beneficiaries above 150% of poverty. The "tripartisan"
plan would have required that a health plan offering prescription coverage to
Medicare beneficiaries have at least two medications within each therapeutic
class on its formulary and would have deferred decisions about which drugs get
onto a formulary to local boards. The "tripartisan" plan received 48 votes,
short of the 60 votes needed to waive budget rules. |
| Hagel-Ensign - This plan was sponsored by Senators Chuck Hagel
(R-NE) and John Ensign (R-NV). It would have provided full coverage against
catastrophic costs only, with limits on out-of-pocket costs ranging from
$1,500 a year for enrollees at 200% of poverty, up to $5,500 for those at 600%
of poverty. The plan would have made drug discount cards available to all
Medicare beneficiaries, regardless of income. Benefits would have been
administered through private firms. It would have cost $295 billion over 10
years. The Hagel-Ensign plan received, 51 votes, short of the 60 required to
waive budget rules. |
| Graham-Smith - This compromise plan was brought forward on the last
day of debate as a last ditch effort to forge an agreement between the two
parties. It was sponsored by Senators Bob Graham (D-FL) and Gordon Smith
(R-OR). It would have cost $390 billion over 10 years, and like Hagel-Ensign
would have provided catastrophic coverage (coverage for drug costs above
$3,300 for those at or below 200% of poverty, with no coverage for individuals
above this $18,000 threshold). The Graham-Smith plan received 49 votes, far
short of the 60 votes needed to waive the budget rule. |
NAMI will continue pressing members of Congress on the need for a
prescription drug benefit under Medicare and to address the current
discriminatory 50% copayment requirement for outpatient mental illness treatment
services. NAMI's current position paper on Medicare can be found at:
www.nami.org/policy/wherewestand/medicare02.html
Final Senate Legislation Contains Proposals on Reimportation and Restrictive
Formularies
After the defeat of these four competing Medicare plans, the Senate did
muster a majority in favor of the underlying prescription drug bill, S 812. This
legislation contains three major elements that are intended to make prescription
medications less expensive through access to generic substitutes and imports
from Canada. The final bill also contains a proposal that would allow states to
vastly expand discount programs that rely on restrictive formularies that limit
access to medications that are not pre-approved lists.
As passed by the Senate yesterday (by a vote of 78-21), S 812 contains the
following:
- changes to a 1984 law (known as Hatch-Waxman) that regulates the terms
under which generic substitutes can come to the market once the patent on a
brand name product expires (limiting the ability of a brand name manufacturer
to challenge FDA approval of a generic),
- a new program that would allow for reimportation of brand name medications
from Canada, but only after the Secretary of Health and Human Services
certifies both that all reimported products meet all U.S. standards for safety
and efficacy and that consumers will experience substantial savings, and
- incentives for states to expand restrictive formularies in their Medicaid
programs to cover non-Medicaid populations enrolled in state sponsored and
private sector plans (see discussion of the Stabenow amendment below), and
- a $9 billion package of assistance for state Medicaid programs currently
under severe financial strain (see FMAP discussion below).
It is unclear at this time what the future of S 812 is. The Bush
Administration is already on record against major components of the bill,
including the proposed changes to the Hatch-Waxman law. In addition, House
leaders have expressed opposition to consideration of all of these proposals in
the absence of an agreement on a Medicare prescription drug benefit. The House
passed its own Medicare prescription drug bill (HR 4954) on June 28. Thus, it
appears unlikely that S 812 will move forward in the few remaining months of the
of 2002 congressional session.
NAMI Opposes Stabenow Amendment
One of the major pieces in the Senate-passed version of S 812 is an amendment
authored by Senator Debbie Stabenow (D-MI) that would allow states to develop
new programs (or significantly expand current ones) that rely on restrictive
formularies that severely limit access to brand name medications. These
programs, known as "supplemental rebate" programs, typically limit prescribing
options to a single medication within a given therapeutic class (e.g., atypical
antipsychotics or SSRIs). Many also mandate prior authorization or impose a
"fail first" requirement before access is granted to an off-formulary
medication. The Stabenow amendment allows states to expand these restrictions
beyond their Medicaid programs and would create immunity from legal challenges
against these policies brought by patient groups. NAMI opposes the Stabenow
amendment as an assault on the ability of consumers and families to work with
their doctor to select the most clinically appropriate and effective
medication(s).
Senate Approves Medicaid FMAP Increase for the States
As noted above, the Senate did vote 75-24 in favor of a $9 billion package of
temporary fiscal relief for the state Medicaid programs. As the fiscal pressures
on states have increased in 2002 as a result of the current economic downturn,
governors and state legislatures across the country have been forced make deep
cuts in their Medicaid programs. In many instances these cuts have come down
hardest on children and adults with severe mental illnesses. Especially
vulnerable as states have moved to cut Medicaid are prescription drugs and many
optional services such as intensive case management that are part of the
assertive community treatment model.
The amendment passed by the Senate would provide fiscal relief to the states by
increasing the federal share of the Medicaid program, known as FMAP. It would
provide a temporary (18 month) increase in each state's FMAP that would a total
of $6 billion. The amendment would also add an additional $3 billion to the
Social Services Block Grant (SSBG) which many states use to provide
community-based mental health services. NAMI supports this effort to help
prevent further cuts to state Medicaid programs across the country. It is
expected that the National Governors Association will make an attempt to add an
FMAP increase to separate spending legislation this coming fall, given the
uncertain prospects for S 812 in the House.
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