A proposal by Senate Veterans Affairs Committee Chairman Arlen Specter (R-Pa.) to offer all Medicare-eligible veterans access to VA drug prices is the latest possible senior drug coverage fallback bill to be introduced in Congress.

The "Veterans Prescription Drugs Assistance Act" (¹ S 1153), introduced May 23, would give Medicare-eligible veterans access to the Veterans Affairs department formulary without requiring that they enroll in the full VA plan.

"Any Medicare-eligible veteran may elect to be furnished...on an out-patient basis, such drugs and medicines as may be ordered on prescription of a duly licensed physician as specific therapy in the treatment of any illness or injury suffered by such veteran," the bill says.

However, Medicare-eligible veterans electing VA drug coverage would be guaranteed only a price equal to the VA's acquisition cost for a drug. Veterans enrolled in the VA health system pay only a $7 per month copay.

In one sense, Specter's bill is a variant of a 1999 proposal by Rep. Tom Allen (D-Maine) to offer all Medicare seniors access to Federal Supply Schedule prices (² Also see "Medicare FSS Plan Would Cost VA Over $500 Mil., Rep. Stearns Says" - Pink Sheet, 11 October, 1999., p. 4). The Allen bill (³ HR 664) was never considered on the House floor, but it touched off the pricing-focused themes of the Medicare drug coverage debate.

The pharmaceutical industry argued vigorously against the Allen bill, painting it as a price control measure. Specter's proposal may be more difficult for the industry to mobilize against, both because of the Republican affiliation of the sponsor and because of the relatively narrow focus on veterans theoretically eligible for the discounts already.

Specter noted that VA has suspended enrollment of new beneficiaries for budgetary reasons as more and more seniors opt to enter the system.

The Pennsylvania Republican characterized S 1153 as an attempt to allow veterans to access the favorable drug prices without having to leave the Medicare program - and, potentially, as a way to ease some of the budgetary strain on the VA.

The bill may "induce some VA-enrolled Medicare-eligible veterans - those who were happy with their Medicare-financed care but who enrolled for VA care to gain access to VA-supplied drugs - to return to non-VA care with knowledge that they will be able to get their non-VA prescription filled through VA," Specter said.

The bill suggests VA may institute "enrollment fees, a copayment structure, or a simple 'cost plus' - or administrative expenses pricing format - or some combination of those mechanisms" to ensure that it recoups the acquisition cost of the drug.

"I intend for the VA to experiment with different pricing structures to determine what works best," Specter said in a speech on the Senate floor.

Specter's bill is one of several pending proposals that would expand senior drug coverage in narrowly targeted areas.

Serious consideration of the targeted measures is likely to be deferred while Congress focuses on a broad Medicare prescription drug benefit. However, the proposals could be candidates for end-of-session action if the drug benefit fails.

Other examples of targeted bills include ⁴ HR 2223, introduced May 22 by Rep. Dave Camp (R-Mich.), which would extend Medicare Part B drug coverage to immunosuppressive drugs taken by organ transplant patients. Sen. Richard Durbin (D-Ill.) introduced a similar bill (⁵ S 178) in January.

A bill authorizing Medicare coverage of oral chemotherapy drugs originally authored by Sen. Jay Rockefeller (D-W.Va.) (⁶ S 1037) has also been reintroduced by Sen. Olympia Snowe (R-Maine) during this session.

The Senate Finance Committee is expected to begin marking up a Medicare drug benefit bill the week of June 9, followed shortly by House Energy & Commerce and Ways & Means Committees' markups. Finance Chairman Charles Grassley (R-Iowa) is understood to have been given the green light by House leadership to proceed with a markup first in return for withdrawal of an amendment to the recently passed tax bill that would have increased Medicare payments to rural providers (⁷ Also see "Procrit Medicare Charges Would Drop Almost $100 Mil. Using 85% Of AWP" - Pink Sheet, 26 May, 2003., p. 25).

VA Drug Coverage Expansion Proposed; Fallback If Medicare Rx Fails?

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