THE WHITE HOUSE

Office of the Press Secretary

PRESIDENT CLINTON AND THE DEMOCRATIC LEADERSHIP HIGHLIGHT NEW STUDY DOCUMENTING PRESCRIPTION DRUG PRICE INCREASES THAT DOUBLE

                            INFLATION RATES
         Families USA Report Validates the Need for a Medicare
                       Prescription Drug Benefit
                             April 26, 2000

President Clinton today, along with Senator Tom Daschle and House Democratic Leader Dick Gephardt, will join Families USA in releasing a new report on prescription drugs. The report shows that, on average, the price for the 50 drugs most commonly used by seniors increased at nearly twice the rate of inflation during 1999. The President will point out that this finding, combined with the recent HHS report showing that the price differential for older and disabled Americans with and without coverage has nearly doubled, underscores the need for a voluntary Medicare prescription drug benefit. While praising the House Republican leadership for endorsing the principle of the need for an affordable, optional prescription drug benefit available to all Medicare beneficiaries, the President will note that the policy advocated by the House Republicans does not achieve their stated goals. He will challenge the Republicans to move swiftly to amend their proposal to assure that all Medicare beneficiaries have access to an affordable prescription drug benefit option.

NEW ANALYSIS INDICATES THAT PRESCRIPTION DRUG PRICES WILL CONTINUE TO RISE. While senior citizens generally live on fixed incomes that are adjusted to keep up with the rate of inflation, a new report by Families USA entitled Still Rising demonstrates that prescription drug costs have risen at double that rate over the past six years -- and are expected to continue to rise. Key findings of the Families USA report include:

• In 1999, the prices of the prescription drugs most commonly used by seniors increased at almost double the rate of inflation. The report found that prices of the 50 prescription drugs most frequently used by the elderly rose by nearly two times the rate of inflation during calendar year 1999. On average, the prices of these drugs reportedly increased by 3.9 percent from January 1999 to January 2000 (versus 2.2 percent for general inflation).
• Moreover, these increases are part of a trend: Over the past six years, the prices of the prescription drugs most commonly used by seniors also increased by twice the rate of inflation. The report finds that the price of the 50 prescription drugs most commonly used by older Americans increased by 30.5 percent since 1994 -- twice the rate of inflation. More than half of the most commonly used drugs that were on the market for the entire six year period had price increases that were double the rate of inflation. In addition, the Families USA report concludes that more than 20 percent of these prescription drugs increased in price by three times the rate of inflation over that time period.
• Seniors with common chronic illnesses are often forced to spend well over 10 percent of their income on prescription drugs. The new Families USA study demonstrates that a widow with diabetes, hypertension, and high cholesterol, living on an annual income of $12,525 (150 percent of the poverty level) will spend 18.3 percent of her annual income on prescription medications. The same woman with an annual income of $16,700 (200 percent of the poverty level) will spend 13.7 percent of her income on these medications. This finding, which is consistent with the conclusions of studies conducted by HHS, clearly demonstrates that failure to provide a voluntary, affordable, and accessible Medicare prescription drug benefit will impose a continuing and growing burden on middle-class older Americans and people with disabilities.

PRESIDENT CLINTON CHALLENGES THE REPUBLICAN LEADERSHIP TO MODIFY THEIR POLICY TO MATCH THEIR STATED GOALS. While praising the House Republican leadership for recognizing the need for an affordable, optional prescription drug benefit available to all Medicare beneficiaries, the President will note that the policy advocated by the House Republicans does not achieve their stated goals. Their current approach is underfunded, unlikely to be available to all beneficiaries, and would almost inevitably be unaffordable to millions of seniors and people with disabilities, even if it is available in some places. In addition, because of its lack of details, it raises more questions than it answers, including how much the premiums are, what the benefit would be, and how much it will cost. The President will challenge the Republicans to move swiftly to amend their proposal to assure that all Medicare beneficiaries have access to an affordable prescription drug benefit option. The House Republican proposal:

• Reneges on funding commitments for a meaningful prescription drug benefit. Earlier this year, the Republicans indicated they would commit $40 billion for a prescription drug benefit, but their budget resolution dedicated as little as $20 billion to improve the Medicare program to include a prescription drug benefit. Moreover, the lack of their willingness to release 10-year numbers on their prescription drug proposal raises serious concerns that their tax policy consumes virtually all revenue necessary to adequately fund a drug benefit into the future.
• Does not assure availability of prescription drug coverage. Because the Republican plan relies on private insurers to offer a drug-only benefit voluntarily, this policy cannot be guaranteed to be available to all seniors in need of a drug benefit. In testimony before the Congress, the insurance industry itself has expressed skepticism about the effectiveness of the Republican approach.
• Not affordable for most seniors, even if it is available. Furthermore, because it provides direct premium assistance only to beneficiaries with annual incomes of under $12,600, the Republican benefit will almost certainly fail to be an affordable option even if it's available. If enacted, the Republican proposal would mark the first time in the program's history that Medicare would not provide universal premium assistance for benefits, and it would undermine the social insurance concept of the program. Finally, because of the proposals reliance on the Medigap insurance market, which frequently does not negotiate lower prices on behalf of its enrollees, it casts doubt on whether beneficiaries would have access to market-leveraged discounts.

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