Statement of Congressman John D. Dingell, Ranking Member
Committee on Energy and Commerce

SUBCOMMITTEE ON HEALTH
HEARING ON “MEDICAID PRESCRIPTION DRUGS
EXAMINING OPTIONS FOR PAYMENT REFORM”

June 22, 2005

Mr. Chairman, thank you for holding this important hearing today. It is clear that we can help both beneficiaries and taxpayers by making sensible changes to the payment system for Medicaid prescription drugs. Currently, drug companies are being overpaid, and generic drugs are being underutilized. But as we examine the various options for reforms, I caution my colleagues that changes that would have the effect of shifting more of the cost burden to beneficiaries and providers could be dangerous and counterproductive.

We will hear a good deal today about payments to pharmacists. Improvements to their payments, if done right, could benefit pharmacies and save money for the Government. But Medicaid policy is multifaceted and there are other options for reforms to prescription drug policy that we should not ignore.

As we will hear from the Congressional Budget Office, the drug companies too, have something to offer. Medicaid generally has been doing a good job getting rebates from manufacturers. The Medicaid program accounts for 15 percent of U.S. spending on prescription drugs. With that level of purchasing power, Medicaid shouldn’t merely get a “good” discount, they should get the best.

As the Government Accountability Office will testify, there certainly also is a need for greater accountability, particularly on the part of the Centers for Medicare and Medicaid Services (CMS) in their administration of the rebate program. CMS has been lax in issuing guidance on how manufacturers should calculate the rebates, so lax that the Inspector General has been unable to conduct appropriate audits. This too could save money for the States and Federal Government, without harming the beneficiaries.

We should also explore ways to increase the use of generic medicines -- an opportunity to save money for the program without compromising beneficiary access to care. Some States, such as Arizona, have done an outstanding job of increasing the use of generic drugs, which saves the Medicaid program significant funds. Other States, however, have not moved so far along that path.

 But as we consider these changes, we must protect the access to medicines for the more than 50 million Americans who depend on Medicaid for their care. Already, one in four adult Medicaid patients cannot afford to fill a needed prescription. This burden falls disproportionately on the sick in Medicaid, where more than 40 percent of patients with two or more chronic conditions could not obtain needed medicines because of cost. In States that have implemented multiple cost controls such as prior-authorization and preferred drug lists, the danger of precluding access is even greater. Given that Medicaid was designed to ensure access to medical care for the poorest and sickest Americans, what we should be addressing is how to expand, rather than restrict, access to needed health care.

Again, I commend the Chairman for holding this hearing; I hope we will consider all options for improving the Medicaid prescription drug program, not just the narrow issue of payments to pharmacists. At the same time we must keep in mind that a benefit that is unaffordable for those who need it is no benefit at all. Payment reforms should not mean that those who need care under Medicaid cannot get it.

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(Contact: Jodi Seth, 202-225-3641)