Restoring Drug Rebates in Medicare Would Save $141 Billion
Today, members of Congress in both the House and the Senate introduced the Medicare Drug Savings Act of 2013, which would restore drug rebates for low-income people with Medicare. President Obama included a similar proposal in his budget last week, and for good reason. Getting Medicare a better price on prescription drugs would save the federal government more than $140 billion without shifting costs to low- and middle-income seniors.
Drug rebates (often referred to as discounts or subsidies) are not as complicated as they may sound. It simply means that the federal government gets a better price on drugs, saving Medicare money without shifting costs to health care consumers.
Drug rebates are not new. Prior to 2003, the federal government received rebates from pharmaceutical manufacturers for drugs provided to people who were eligible for both Medicare and Medicaid. Drug rebates in Medicare is a common sense way to reduce federal health care costs. This proposal is attractive because:
- Medicare drug rebates would not shift costs to seniors. Remember, of the 50 million people who rely on Medicare for health care, half live on annual incomes of $22,500 or less. Furthermore, Medicare beneficiaries already spend about 15 percent of their incomes on health care expenses—three times more than people without Medicare.
- Drug rebates have been proven to save money. The Medicaid program already benefits from lower drug prices thanks to federal rebates on prescription drugs. A study by the Department of Health and Human Services found that in 2011, Medicaid saved an average of 45 percent on leading brand-name drugs, while Medicare Part D’s average savings was only 19 percent.
- Several studies show that pharmaceutical spending on research and development is not at risk, so rebates would not threaten pharmaceutical innovation.
- A recent national poll found that 68 percent of Americans are in favor of restoring drug rebates in Medicare.
Are you interested in seeing drug rebates in Medicare come to fruition? Do you want to avoid forcing seniors and people with disabilities to pay more for their health care? Contact your members of Congress today and ask that they cosponsor the Medicare Drug Savings Act of 2013.