AARP to push Medicare fix-up

WASHINGTON — WASHINGTON - AARP, the influential lobby for older Americans, said yesterday that it will seek changes in the new $395 billion Medicare law to allow the government to negotiate lower drug prices for Medicare beneficiaries if private insurers do not rein in drug costs.

"We are beginning an all-out effort to lower the high cost of prescription drugs," said William D. Novelli, chief executive of AARP.


The law explicitly prohibits the government from interfering in negotiations between manufacturers and the private entities that will provide subsidized drug benefits to the elderly. Republicans and some Democrats insisted on that ban as a way to avoid any hint of federal price controls. They are counting on the private plans to negotiate discounts.

AARP, which has more than 35 million members age 50 and older, was instrumental in securing passage of the legislation, drafted mostly by Republicans. But Novelli said yesterday that the law did not go far enough.


Congress, he said, should authorize the secretary of health and human services to "negotiate lower drug prices on behalf of Medicare beneficiaries in the event competitive purchasing doesn't work to lower prices."

When AARP endorsed the Medicare bill last year, it infuriated many congressional Democrats and some of its own members, who asserted that the legislation would privatize Medicare. At least 45,000 members resigned in anger, Novelli said.

Novelli said he had no regrets about the endorsement. But, he said, the ensuing uproar has reinforced AARP's determination to make drugs more affordable for all Americans.

"We had intended to keep after drug costs all along," Novelli said. "The public clamor reinforces that. The secretary's authority to negotiate prices has become more of a hot potato in recent weeks."

Rep. Pete Stark of California, Democratic spokesman on health policy, said AARP leaders were busily making the rounds on Capitol Hill this week "in an attempt to rehabilitate themselves as advocates for America's seniors." He urged his colleagues to reject such overtures.

Outlining its agenda, AARP said Congress should allow Americans to import cheaper prescription drugs from Canada. Novelli said Congress could impose "strict controls, to ensure that consumers are ordering only from reputable Canadian pharmacies." The Bush administration has said it has no plans to allow such imports. Novelli also said drug manufacturers and distributors should "voluntarily limit price increases to no more than the rate of inflation" for goods and services in general. AARP said it would lobby Congress to enrich the Medicare drug benefit and to reduce what beneficiaries have to pay. It proposed these changes:

The government should help fill the gap in drug coverage, sometimes called a "doughnut hole." Under the standard benefit, Medicare will pay 75 percent of annual drug costs from $251 to $2,250, but coverage will then stop until the beneficiary has spent $3,600 out of pocket.

The deductible and other costs to beneficiaries, which increase automatically with Medicare drug spending, should be linked instead to the Consumer Price Index, which is expected to grow at a much slower pace.


The government should abolish the limit on assets for low-income people seeking extra assistance with drug costs. This would help 1.5 million Medicare recipients.

AARP offers a drug discount card, which members can use to obtain discounts averaging 20 percent, AARP executives said. Novelli said the group will seek a federal endorsement for its card. Government-approved cards will provide up to $600 a year in federal aid to low-income elderly people who have no drug coverage. The card program ends in 2006, when the Medicare drug benefit begins.

Under the law, Medicare drug plans can establish lists of preferred drugs, believed to offer the best value to patients. But Novelli said the plans should be required to inform beneficiaries, before they enroll, precisely which drugs are on the lists.