New GAO Report Highlights Importance of Health Care Reform Law’s Medicare Drug Savings for Seniors

Mar 14, 2011

A new GAO report today released by Reps. Henry A. Waxman, Sander Levin, Diana DeGette, Pete Stark, John Lewis, and Charles B. Rangel shows that prior to passage of landmark health care reform legislation in March 2010, prescription drug prices were increasing at rates well above the inflation rate.  

GAO found that between 2006 and 2010, prices for commonly used brand-name drugs increased at an annual rate of 8.3%.  For many drugs, price increases were even higher. 

“These soaring price increases seem to defy explanation,” said Rep. Waxman, Ranking Member of the Energy and Commerce Committee.  “Congress needs to investigate and stop drug companies from overcharging seniors.  This new report also shows the importance of the benefits we provided to seniors when we closed the Part D drug donut hole in the health care reform law.  Now thanks to the health care reform law, the average senior who hits the drug donut hole will get some protection from drug price hikes and save over $500 in 2011.” 

“This report only further illustrates the importance of closing the prescription drug donut hole and providing relief to seniors through health care reform,” said Rep. Levin, Ranking Member of the Ways and Means Committee.  “At every step, I will vehemently oppose reckless Republican efforts to take away those benefits from seniors.  The Committees will diligently monitor drug price trends to make sure that seniors benefit from the full discount.”

“We have long been deeply concerned about the exorbitant price increases for prescription drugs and their impact on America’s seniors,” said Rep. DeGette, Ranking Member of the Energy and Commerce Subcommittee on Oversight and Investigations.  “Sadly, today’s report confirms that seniors have indeed been forced to spend far too much of their limited income to simply pay for their doctor-prescribed medications.  While the Affordable Care Act goes a long way towards protecting our seniors, by closing the drug donut hole and saving seniors over $500 a year, this report demonstrates that it is imperative we in Congress take every necessary step to end these unfair practices by drug companies.”

“Drug prices have been rising well ahead of inflation,” said Rep. Stark, Ranking Member of the Ways and Means Subcommittee on Health.  “This report reminds us that this is an area where we should be looking for savings for taxpayers and beneficiaries.”

“It is our moral obligation to ensure that seniors can afford their life-saving medications,” said Rep. Lewis.  “I am disappointed to see that drug companies have taken advantage of our seniors by raising their prices unnecessarily high.  I am proud that the Affordable Care Act will further protect our seniors from these high drug prices by closing the Part D donut hole once and for all.”

“The GAO report shows the real need to make certain that our senior citizens have access to prescription drugs,” said Rep. Rangel.  “What good is visiting doctors and clinics if seniors cannot afford to get their life-saving prescriptions?  We should never have to see seniors forced to choose between food and drugs.”

The Affordable Care Act provides seniors who hit the Part D drug donut hole with a 50% discount on brand-name drugs this year and will completely close the donut hole by 2020.  The law also increases rebates for drugs under the Medicaid program, reducing taxpayers’ drug costs by billions of dollars.

The GAO report also shows that increased generic competition can help mitigate the impact of brand-name drug price increases, finding that average prices for generic drugs declined over the last four years.  The health care reform legislation created new incentives for the use of generic drugs in the Part D drug program.  These new provisions will help save taxpayers and seniors billions of dollars over the next decade.

In addition, Reps. Waxman and DeGette also sent a letter today to Energy and Commerce Committee Chairman Fred Upton and Subcommittee Chairman Cliff Stearns requesting an investigation into the rising prescription drug prices and a hearing on options for reducing high drug prices for seniors, taxpayers, and all Americans. 

The full GAO report can be accessed here. The letter sent to Reps. Upton and Stearns can be viewed here.