Show #266 Airing Sunday, 8/8/04
The AARP is the largest and most powerful senior advocacy group in the country. So when AARP put its huge clout behind the Medicare Prescription Drug law, it passed.
Many long time seniors advocates, like Congressman Sherrod Brown of Ohio, criticized the law and the AARP for supporting it. In response, AARP ran ads praising the new law and justifying its support.
So why is the AARP now backing off and calling for major changes? The answer is simple: the flaws in the law are so huge that they’re threatening to overwhelm the benefits.
The major benefit of the law is that it provides coverage for prescription drugs. Not complete coverage, but at least partial subsidies.
The problem is that the law does nothing to restrain the drug companies from raising prices. And indeed, the prices have been skyrocketing. Think about it like this: if the government gives you $100 for your drug bills, but your costs go up $200, you’re worse off, not better off.
The AARP now is calling for two major changes in the drug legislation. First, it says that Americans should be permitted to buy less costly drugs from Canada and other countries. Canada-based pharmacies sell many medications for half the price of the same medication sold here. If Americans were permitted to buy their medications at low prices from Canada, that would create significant price competition in the U. S., and likely would drive down prices for drugs sold here.
The second change now being called for by AARP would allow the federal government to negotiate with the drug companies for lower prices. Uncle Sam is paying billions of dollars of our tax money to the drug companies, under the Medicaid and now the Medicare programs. That gives the federal government tremendous buying power. Just think if the government went to the drug companies and said, “look, if you want to participate in Medicaid and Medicare, if you want our billions of dollars, then you have to lower the costs.” What do you think the drug companies would do? They’d cut the costs of medicines.
There’s precedent for this approach. The federal government already negotiates lower prices for veterans.
In the Medicare Prescription Drug Bill, Congress specifically barred the federal government from negotiating with the drug companies. In effect, the law told the drug companies: we’re opening up the federal treasury to subsidize prescription drug costs, whatever they are. You charge, and we’ll pay. And don’t worry boys, charge what you want, there’s no limit!
Now the AARP has had an epiphany. Maybe giving the drug companies the keys to the federal treasury wasn’t such a good idea.
AARP now wants to shut the barn door, even though the horse has already escaped. It’s calling for changes in the law to allow Americans to buy drugs from Canada, and to permit the federal government to negotiate lower prices with the pharmaceutical companies. I commend the AARP for this belated effort. But my question is: what changed? Why didn’t the AARP lobby to allow drug purchases from Canada less than a year ago, when the law was passed? Have the medicines from Canada all of a sudden become more safe to use? I don’t think so.
And why didn’t the AARP insist on allowing the government to negotiate prices with the drug companies, before the law was passed? There must be a good reason. I’m sure it had nothing to do with the fact that AARP, through its managed care, mail order drug sales and other health-related businesses, is likely to make many millions of dollars as a result of the Prescription Drug law. Right!
