THE WHITE HOUSE

Office of the Press Secretary

PRESIDENT CLINTON REBUFFS DRUG INDUSTRY ADS, ORDERS STUDY ON DRUG COSTS,

             AND ANNOUNCES NEW SURPLUS RESERVE FOR MEDICARE
                            October 25, 1999

Today, the President will make a series of announcements to refocus the nation and the Congress on the need to strengthen and modernize Medicare, including the provision of a long-overdue prescription drug option. Criticizing the pharmaceutical industry's multi-million dollar campaign against a Medicare drug benefit he will: (1) direct HHS to produce its first study on drug costs and trends, documenting problems faced by Medicare beneficiaries; and (2) announce that his Social Security legislation will reserve one-third of the non-Social Security surplus for Medicare and challenge Congress to pass it. Last Friday, Vice President Gore also expressed his concern about the inability of older and disabled Americans to access affordable prescription drugs. Today, the President will:

Direct HHS to produce its first study on prescription drug costs and trends. The President will direct the Secretary Donna Shalala to produce the first-ever Health and Human Services (HHS) study of prescription drug costs and trends for Medicare beneficiaries with and without coverage. The study, which will be released within 90 days, will investigate:

• Price differences for the most commonly used drugs for people with and without coverage;
• Drug spending by people of different ages, as a percentage of income and as a percentage of total health spending; and
• Trends in drug expenditures by people of different ages, as a percentage of income and total health spending.

This study will build on two Administration studies released in 1999 that examined coverage patterns and trends for Medicare beneficiaries and decreases in Medicare managed care plan coverage of prescription drugs. The President will also announce that he has directed his staff to produce a state-by-state analysis of the need for Medicare reform. These reports will lay the foundation for an informed public debate about prescription drug coverage.

Announce that he will send Congress legislation to reserve one-third of the non-Social Security surplus for Medicare and challenge the Congress to pass it. In his radio address on October 23, the President announced that he would send to Congress legislation that protects the Social Security surplus, extends the solvency of Social Security through 2050, and pays off the debt. Today, he will announce that this legislation will also reserve one-third of the non-Social Security surplus for Medicare. This reserve can be used to extend Medicare's solvency and help fund a prescription drug benefit. The precise allocation of these reserved funds will be left open to provide flexibility to develop a broad-based Medicare reform proposal that can generate bipartisan support. The President will challenge Congress to pass the legislation he is submitting this week, emphasizing that it lays the foundation for necessary Medicare and Social Security reforms next year.

Criticize the multi-million dollar, industry-sponsored campaign against a Medicare prescription drug benefit. Despite widespread support among Republicans and Democrats for some type of prescription drug benefit for Medicare beneficiaries, no action has been taken in this Congress - in part because of the deceptive, multi-million dollar advertising campaign launched by opponents. Citizens for Better Medicare, a group organized and primarily funded by the pharmaceutical industry, is sponsoring TV, radio and print advertisements that include several myths about the President's plan for a prescription drug benefit. These myths include:

"Big government in my medicine cabinet." This is false. The President's proposal ensures that all classes of drugs are covered - and that any doctor can prescribe a drug that is medically necessary without constraints. No government restrictions would be imposed, nor does the President's plan include price controls. It relies on private benefit managers, chosen through a competitive process, to structure the coverage policies. This is exactly the way that the best-managed private employers pay for drugs. In fact, the President's plan would actually increase, not decrease, choice of medicines since it would give the tens of millions of Medicare beneficiaries who currently lack dependable on coverage a new option to buy basic coverage at an affordable price.

"All seniors will be forced into a government-run plan." This is a false claim designed to scare seniors. The President's drug benefit is purely optional - if beneficiaries want to keep their current coverage, they can. Unfortunately, very few seniors have decent, dependable options today. In just the past four years, the number of firms offering retiree coverage dropped by 25 percent. The President's plan actually provides employers over $10 billion in incentives to offer and continue prescription drug coverage. And the plan is not "government-run" since beneficiaries choose coverage through either private drug benefit managers or Medicare managed care plans.

The President will urge the drug industry to be constructive as he works to forge a consensus on critical Medicare reform legislation. America's elderly deserve more than the industry's evasive scare tactics.

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