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Conclusion

AARP is a strong advocate of comprehensive health care reform that includes prescription drugs as a benefit for all Americans. We believe that any prescription drug benefit included under a reformed system must: 1) guarantee access to needed drug therapies; 2) contain cost effectively; 3) rely on stable, broadbased, and equitable financing; 4) provide for a parallel benefit structure across all ages; 5) protect low-income beneficiaries from exorbitant costs; and 6) encourage appropriate prescribing, monitoring, and use of medications.

Thank you for giving AARP the opportunity to express its views on this important issue. We applaud the leadership of the Chairman and the other members of this subcommittee for your efforts to reform our health care system. We look forward to working with you to achieve passage of comprehensive health care reform legislation that includes a meaningful prescription drug benefit for all Americans.

Percent Having
Prescription Drug Coverage

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75%

AGE 45-54

Source:

"The Need for a Prescription Drug Benefit Under the Medicare Program," prepared for AARP by Chilton Research Services, June 1992. Chart II

[graphic]

Where the U.S. Prescription Dollar Goes (Manufacturers Component)

Distribution and
Administration

Cost of Goods

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Taxes

16%

Research and
Development

Source: Prime Institute, January 1993

Profits

Marketing and
Advertising

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Chairman STARK. Martha, welcome back. Why don't you proceed? STATEMENT OF MARTHA MCSTEEN, PRESIDENT, NATIONAL COMMITTEE TO PRESERVE SOCIAL SECURITY AND MEDICARE

Ms. MCSTEEN. Mr. Chairman and members of the Subcommittee on Health, as president of the National Committee to Preserve Social Security and Medicare, I can assure you that no other health care issue with the possible exception of long-term care so worries our most vulnerable seniors.

Any national plan to reform health care must include some coverage of prescription drugs for citizens of all ages. I would like to discuss four aspects of this important issue: need, cost containment, quality control and financing.

The high cost of prescription drugs is devastating to low and moderate income seniors. Although some national committee members have supplemental insurance that provides at least some coverage of prescription drugs, many have no such coverage at all.

I have received several hundred letters from national committee members recently who report prescription drug costs of up to $100 a week. We have many members whose monthly prescription drug costs far exceed their Social Security benefits. The result as we have testified many times before is that these hard-pressed seniors are forced to make painful choices between medicines and heating oil or food just because of the cost. This is no way to live.

The National Committee believes that cost containment mechanisms must be built into any prescription drug benefit. We believe the pharmaceutical industry can and should voluntarily hold down prices. We think a prescription drug formulary is appropriate and think some kind of price monitoring and review mechanism should be established.

While prescription drug utilization review can help control cost, we think its real value lies in the potential for improving quality of care. For this reason, the National Committee believes that any plan to assure payment for prescription drugs must try to assure that noncompliance and misuse of medications are kept to a mini

mum.

According to the Institute of Medicine, one-third of all persons over 65 take at least 3 medications regularly. This is called polypharmacy and it indicates the potential for harmful interactions. Studies have reported that 10 to 17 percent or more of all hospital admissions of older patients are associated with medication problems. These medication related hospitalizations cost an estimated $4.5 to $7 billion annually, according to a 1989 study by the HHS Inspector General.

In light of all this, the National Committee would like to offer a suggestion. We would like to see funds earmarked for the kind of research recommended by the Institute of Medicine, large-scale studies of medication used in older populations, studies of the relationship of medication use to clinical outcomes, and studies in the ways in which the biological changes of aging affect older patients' responses to medications.

The National Committee supports broad-based financing for health care reform. As I have said many times, Medicare beneficiaries are willing to pay their fair share for health care reform generally. Unfortunately, the House reconciliation legislation includes $50 billion in Medicare cuts over a 5-year period for deficit reduction and the Senate Finance Committee would add an additional $20 billion in cuts.

Any cuts in Medicare should be consistent with the yet-to-be-proposed health care reform plan and its cost containment provisions. In fact, any cuts in Medicare should be regarded as having been made in the name of health care reform.

The National Committee supports eliminating the wage base on the Medicare payroll tax, and of course we would have preferred that money be used for health care reform. We are opposed to financing prescription drug coverage through an extremely high, $850 or over, deductible as it would provide little help to low and moderate income seniors. A much lower deductible with say a 50 percent copay instead of a 20 percent copay might even be preferable, especially if coupled with limits on total out of pocket costs.

The National Committee supports large increases in so-called sin taxes to finance health care reform. From our perspective, any evaluation and selection of financing options should be based on a total health care reform package, not on a prescription drug benefit alone.

Thank you for this opportunity to appear before you, Mr. Chair[The prepared statement follows:]

man.

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