WASHINGTON, D.C – Following a report from the U.S. Department of Health and Human Services Inspector General that says Medicaid brand-name drug rebates substantially exceed Medicare Part D Rebates, U.S. Sen. Sherrod Brown (D-OH) today introduced legislation to protect seniors’ access to necessary medications and reduce Medicare Part D drug costs to taxpayers while also cutting the deficit by millions. The Medicare Drug Savings Act would lower prescription drug costs and increase access to medications for certain low-income seniors and other beneficiaries who are dually eligible for Medicare and Medicaid.

“For too long, pharmaceutical companies have been profiting off their ability to charge our most vulnerable Medicare beneficiaries higher prices for their drugs,” Brown said. “Medicare should have the same ability as the Medicaid program and private insurance companies to negotiate better prices for eligible beneficiaries. The Medicare Drug Savings Act would give Medicare the ability to provide lower drug prices for low-income Medicare beneficiaries who have a limited monthly income. By eliminating unnecessary payments to the drug companies, we can reduce our deficit without reducing benefits.”

The bill would eliminate a deal for drug manufacturers that allows them to charge Medicare higher prices for some seniors’ prescription drugs. Under the bill, companies would be required to provide rebates to the federal government on drugs for individuals that are eligible for both Medicare and Medicaid as well as other low-income Medicare beneficiaries. 

Before the creation of Medicare Part D, brand-name drug manufacturers paid rebates on drugs used by dually eligible beneficiaries in Medicare and Medicaid. But when Medicare Part D was created, drug coverage for dually eligible beneficiaries switched from Medicaid – which could negotiate with drug companies for rebates – to Medicare Part D – which could not. By charging Medicare higher prices for prescription drugs for dual eligibles, these companies are profiting at taxpayers’ expense.

The Medicare Drug Savings Act would correct this by requiring brand-name drug manufactures to pay rebates to the federal government on drugs for individuals that are eligible for both Medicare and Medicaid. It would also extend rebates to beneficiaries enrolled in the low-income-subsidy in Medicare Part D. All large purchasers of prescription drugs negotiate better prices, including the Medicaid system and private insurers. This bill reinstates the government’s ability to negotiate rebates for dually eligible beneficiaries, just as they do for Medicaid beneficiaries that are not also eligible for Medicare. It corrects the unnecessary and excessive payments to drug companies, while also saving taxpayers and the federal government from footing unnecessary costs.

The bill is endorsed by: Medicare Rights Center, AFSCME, National Education Association, AARP, AFL-CIO, Alliance for Retired Americans, Center for Medicare Advocacy, National Committee to Preserve Social Security and Medicare, and Justice in Aging.

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