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Comments to the Senate Subcommittee for Senate File 161
Comments to the Senate Subcommittee for Senate File 161
Presented by Matt Russell, Iowa Citizen Action Network
Mr. Chairman and members of the subcommittee, thank you for providing me this opportunity to speak with you about the needs of Iowa’s uninsured and underinsured. My name is Matt Russell and I do health care organizing for Iowa Citizen Action Network.
From all of the available sources, we can deduce that about ¼ of all Iowans do not have insurance coverage for prescription drugs. What this means is that these Iowans have the buying power of exactly one person. Their options for getting lower prices are very few. They can ask their doctor for free samples. They can try to get on a free program or a discount program from the pharmaceutical manufacturers. They can shop among pharmacies for the best price including mail order and sourcing from other countries. And they can ask their pharmacist to cut them a deal.
Iowans without prescription drug coverage need lower prices. The above mentioned strategies can provide some relief, but that relief is uncertain, it drives Iowans away from Iowa owned and operated businesses, and it places the burden of price relief on the consumer and the pharmacist. The pharmaceutical manufacturer provides none of the relief from escalating prices. I’ll say a word about the industry programs that offer free or discounted drugs in a minute.
We know that more than 80 percent of the cost of pharmaceuticals comes from the manufacturer. Therefore, the price relief must come from the manufacturer. This legislation quite simply pursues price relief from the manufacturers. It does that using the same mechanism that other entities use: market power. This is not the state of Iowa setting prices. This is the state performing a service for Iowans that will result in real savings for those in our state who do not have prescription drug coverage.
This legislation applies a basic market principle: the larger the quantity in a purchase, the lower the price. In this case, a prescription drug purchase by an Iowan without prescription drug coverage would be pooled with the prescription drug purchases of other Iowans without prescription drug coverage and the pool of Medicaid participants. The resulting collective market power would allow the negotiator to get a better price on the drugs from the pharmaceutical manufacturer. This is what insurance companies do. Kaiser Permanente on the west coast has tens of millions of consumers in their network. That company pays some of the lowest prices in the world—much lower than even prices in Canada. This legislation simply allows Iowans without prescription drug coverage to be pooled together and added to the Medicaid pool for the sake of negotiation with the pharmaceutical manufacturers. The result will be lower prices.
Ironically, the new Medicare law, endorsed by the pharmaceutical manufacturers prevents Medicare from taking advantage of this market principle. The new Medicare law also moves Iowa’s Medicaid population with the highest usage rates of pharmaceuticals (the dual eligible population of elderly and disabled) out of the Medicaid program and into the Medicare program. The reason for this prohibition in Medicare, we believe, is that negotiation by a government entity is successful in reducing prescription drug prices. In other states, pharmaceutical manufacturers have fought similar legislation to that which this subcommittee is considering. We assume that they will oppose this law in Iowa as well. And I don’t blame them, they would prefer to not lower their prices. However, let me reiterate, this legislation does not use price controls or price setting. It simply uses market power to make the pharmaceutical manufacturers compete for access to the combined pool of Medicaid participants and Iowans without prescription drug coverage. This law has the ability to lower the prices for Iowans without prescription drug coverage and to lower the costs for the Medicaid program. With a large number of dual eligibles leaving the Medicaid pool in 2006, it only makes sense to add Iowans without prescription drug coverage to make up some of that loss.
Do Iowans want this legislation? In August, Iowa Citizen Action Network delivered 1662 hand written letters to Governor Vilsack calling for this very reform. The letters began "Please continue to fight for fairness in drug prices. The state of Iowa should use its buying power to negotiate discounts from drug companies and pass the savings on to the uninsured and underinsured. This is important to me and my family because…"
And here are a few examples. "I work in mental health and see far too many people who cannot afford medications and struggle with chronic mental illness." Cedar Rapids
"Please do not let pharmaceutical companies continue to make us choose between our health and our family." Newton
"I work as a nurse and every day I see the elderly and underinsured re-hospitalized for not taking their prescribed medications because they couldn’t afford them. Where are we saving money then?" Vinton
"I have seen first-hand the way drug reps come into the hospital to wine and dine the doctors. The drug companies make big money off these connections, but what about the patients? They lose every time." Swisher
This last comment brings me back to the strategy of using the drug companies’ free and discount programs. These programs are part of their marketing strategy. They serve to provide an example of how the drug companies are helping the poor. Pharmacists, community health workers, and patients have told me that their experience of using these programs confirms that the programs are unreliable and appear to be set up more for public relations than to provide consistent and reliable treatments.
Who could participate in this program? Senate file 161 includes any Iowan at or below 300% of federal poverty without prescription drug coverage. Using the 2004 guidelines that would be $27,930 for an individual, $37,470 for a family of two, $47,010 for a family of three, and $56,550 for a family of four. This legislation would benefit a wide cross section of Iowa’s population. Also, the savings to these families would come from pharmaceutical manufacturers and not from Iowa pharmacies. Pharmacies in Iowa, especially in rural Iowa, are important businesses, many of them independently owned small businesses. Iowa has virtually no pharmaceutical industry. Dollars saved would be dollars that do not leave the state. Currently savings from me cutting a deal with my pharmacist have very little multiplier effect.
Finally, this legislation does not displace any of the currently available strategies for people without prescription drug coverage. This program is voluntary for Iowans and for pharmacists. This program is just one more tool that the state of Iowa can provide to the people of Iowa at no cost to the state. We have the Medicaid PDL and we’ll have a years worth of data before this program would be implemented. It’s time for the state of Iowa to stand up on the side of Iowa consumers to bring down the cost of prescription drugs.
Guidling Principles of Health Care Reform
Iowa Human Needs Advocates is a working group of over 30 organizations that advocate in the human services arena. ICAN and IHNA have drafted guiding principles for health care reform in Iowa.
EVENT
RESOURCES
People or Profits: The Game Show
Iowa Human Needs Advocates is a working group of over 30 organizations that advocate in the human services arena. ICAN and IHNA have drafted guiding principles for health care reform in Iowa.
Learn more and take action here, a web site for consumers who want to join the fight for fair prescription drugs prices.
STATEMENT
ICAN organizer Matt Russell addresses committee members regarding the need for prescription drug price relief in Iowa. Read his statement here.
REPORTS
The Excess Cost of the Bush Prescription Drug Plan in Iowa
Learn about how Medicare Part D wastes Iowa taxpayer money and how we can fix this disasterous plan.
Health Care in Iowa: A Continuing Problem of Access
Iowa Policy Project has released this new report on health care access. One in 11 Iowans falls through the cracks of health-care coverage in Iowa, lacking access to health insurance through an employer or through government services – and despite some recent gains, the percentage of Iowans who are uninsured has not improved from the start of the decade.
Medicaid at 40: A Service That Works, For Americans Who Need It
IOWANS FACE RISING DRUG COST BURDEN: Iowa among the states most affected by rising prescription drug costs. Read entire report here.
MEDICARE CAMPAIGN
How will the Bush Medicare Prescription Drug Law affect your budget in 2006? Click here for a month-by-month cost analysis.
To see Important Facts You Need to Know About the Bush Medicare Prescription Law of 2003, click here.
For a fact sheet about The Medicare Prescription Discount Drug Card, click here.
To see how the discount card costs compares unfavorably to VA, Canada, and drugstore.com, click here.
Medicare Worksheet - to estimate what you will have to pay in 2006 for prescription drugs, download and print this worksheet.
NEWS FROM THE ROAD
Medicare Road Show Picks Up Steam in the Midwest, April 13, 2004: Des Moines, Iowa.
PRESCRIPTION DRUG BENEFIT Q & A
The new Medicare law is extremely complicated and extremely politicized. Click here for a question and answer resource from FamiliesUSA that can help you better understand the effects of this law.
HEALTH CARE PRINCIPLES
These principles are the cornerstone of a quality health care system. Any health care proposal must bring us closer to meeting them.
JOINT STATEMENTS
A coalition of groups demands that Senator Grassley protect Medicaid funding. Read the letter here.
Joint statement on the effects of the Prescription Drug and Medicare Improvement Act of 2003
REPORT
Congress’ Prescription Deal Costs Iowans More and Undermines the Entire Medicare System. Released 11/18/03 by ICAN and the Institute for America's Future. Click here.
FACT SHEETS
The Medicare Part D Disaster: Extend the May 15 Deadline
State Rx for 2005: House File 152
Our Fight for Fair Prescription Drug Prices
Capping Medicaid Funding: How Block Grants Would Hurt States -- Families USA, December 2004
Comparing the Medicare prescription drug proposals: Senate, House, and Conference
Iowa State Prescription Fact Sheet
IN THE NEWS
3/25/06, Des Moines Register: Drug-benefit cost: A whopper
3/22/06, Radio Iowa: Group seeks changes in Medicare prescription drug benefit
09/27/05, Quad City Times: Putting a face on budget plight
09/20/05, Des Moines Register: Hearings planned on cuts to social programs
08/13/05, Quad City Times: Letter to the editor -- Health care coverage still a major concern
08/10/05, Des Moines Register: Editorial -- Everyone deserves health-care coverage
08/04/05, Newsradio 1040 WHO: Medicaid Turns 40
07/16/05, Vilsack touts Medicaid effort as national model to fellow governors
PRESS RELEASES
04/20/06 - Extend the May 15 Deadline to Sign Up for Prescription Drug Benefit