Cost Estimate of H.R. 5182

Berry-Jones Bill Would Dramatically Increase Average Cost of Generic Drugs Dispensed through Retail Pharmacies in Medicare Part D

Merritt: Berry-Jones Bill Would Enrich Drugstores at Expense of Seniors, Taxpayers

(Washington, DC)—Medicare legislation sponsored by Representatives Marion Berry (D-Ark.) and Walter Jones (R-N.C.), HR 5182 or “the Medicare FAST Act,” would increase Medicare costs by $55 billion and, in addition, increase beneficiaries’ premiums, cost-sharing, and out-of-pocket costs by more than $30 billion over ten years, according to a new analysis of HR 5182 conducted by the Moran Company and released today by the Pharmaceutical Care Management Association (PCMA).

“The Berry-Jones bill is a recipe for higher prescription drug costs for seniors and the Medicare program,” said PCMA President Mark Merritt. “By almost doubling the average cost of every generic drug dispensed through retail pharmacies under Medicare Part D, the Berry-Jones bill would undermine the very competitive forces that have resulted in deep discounts and lower-than-expected premiums. This legislation might enrich pharmacies, but it would also force seniors to pay billions of dollars more in higher premiums, cost-sharing, and out-of-pocket costs.”

The cost analysis of HR 5182 was conducted by Steve Lieberman, a Partner at the Moran Company, a health-care policy research firm based in Arlington, Va. Prior to joining the Moran Company, Mr. Lieberman served as a senior advisor to the Administrator at the Centers for Medicare & Medicaid Services (CMS) and helped in drafting the regulations implementing the Medicare Modernization Act (MMA). In addition, from 1999-2004, Mr. Lieberman served as the Executive Associate Director and Assistant Director for Health & Human Services for the Congressional Budget Office (CBO), overseeing a staff of 30 focused on health and human resources issues, and where he led CBO’s team working on the MMA.

“The provisions implementing federal ‘prompt payment,’ MTM requirements, and mandating a minimum generic dispensing fee increase Medicare costs by $55.5 billion in FY 2007-2016,” said Steve Lieberman of the Moran Company. Mr. Lieberman also noted that “beneficiaries would pay an additional $12 billion in higher premiums over this period.”

The Berry-Jones bill is one of the most expansive Medicare Part D proposals pending in the 109th Congress. While the Berry-Jones bill has Medicare prompt-pay requirements and medication therapy management (MTM) mandates similar to other proposals introduced on Capitol Hill, the Berry-Jones bill also contains a provision going much further by mandating a minimum dispensing fee of $14 dollars for every generic drug dispensed through retail pharmacies under Medicare Part D. HR 5182 currently has 144 co-sponsors in the US House of Representatives.

Among the key findings from the Moran Company’s analysis of HR 5182:

The Berry-Jones bill would raise Medicare costs by more than $55 billion over the next ten years.

The Berry-Jones bill would increase Medicare beneficiaries’ premiums, cost-sharing, and out-of-pocket costs by more than $30 billion over ten years. The Berry-Jones bill would increase the average annual premium paid by individual Medicare beneficiaries generally by more than $50 per year during the next 10 years.

The Berry-Jones bill would mandate a minimum $14 dollar dispensing fee for every generic drug dispensed through retail pharmacies under Medicare Part D. This mandate alone would result in $58.1 billion in added costs to prescription drug plans, which translates into higher costs to Medicare and higher beneficiary premiums. More than one-half of all prescriptions dispensed under Medicare Part D are generic drugs.

The Berry-Jones bill would institute new timeframes for payment of Medicare Part D pharmacy claims and rigid one-size-fits-all rules for medication therapy management (MTM) programs that would add an additional $9.4 billion in costs to beneficiaries and Medicare during the same ten-year period.

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PCMA is the national association representing America’s pharmacy benefit managers (PBMs), which administer prescription drug plans for more than 200 million Americans with health coverage provided through small businesses, Fortune 500 employers, health insurers, labor unions, and Medicare.

Contact Information:
Phil Blando, 202-207-3614
Charles Coté 202-207-3605