Senior citizens rely heavily on prescription drugs but often struggle to pay for them.
Medicare covers outpatient prescription drugs only for those beneficiaries enrolled in
optional managed care plans. Individuals buying prescription drugs typically pay more than the
price offered to big group buyers who get volume discounts.
In Congress and some states, pending legislation would simply require pharmaceutical
companies to give everybody the best price. By restricting volume discounts, this indirect price-
control approach would raise costs for seniors who now benefit from better deals through
insurers or private purchasing groups. Worse yet, it could prompt manufacturers to withdraw
vital drugs with low profit margins from the marketplace and cut back on pharmaceutical
research and development.
In Arizona, New Democrat State Sen. Chris Cummiskey and Republican State Sen. Tom
Freestone are pushing a market-oriented solution to the problem. Their bill would create a group
purchasing system for Arizona seniors. It would require the state to contract with pharmaceutical
benefit-management companies --the same folks who negotiate for the big purchasers
--to negotiate for any Arizona citizen over the age of 60 who wishes to participate. At a public
cost of just $185,000 per year, the Cummiskey-Freestone bill would give Arizona seniors the
kind of buying power that "big guys" have now.
The bill is based on a May 1999 paper for the Progressive Policy Institute by Dwight
McNeill and David B. Kendall, entitled Medicare Consumer Coalitions: Helping Older
Americans Afford Prescription Drugs.
Approved by the Arizona Senate as an amendment to a broader health care bill, the initiative
is well on its way to becoming a national model. It has already been endorsed by the American
Association of Retired Persons and the National Council on Aging.
"This plan would use the bulk purchasing power of a large group of seniors to lower
prices on prescription drugs," said Cummiskey. "This approach is far superior to
price controls."
