VA buys drugs cheaply, many veterans benefit

Democrats urging a VA-style program for Medicare

Medicare? Since the VA gets the best prices on medicines, the Bush administration is being urged to adopt a VA-style program for Medicare.

May 05, 2004|By Cyril T. Zaneski | Cyril T. Zaneski,SUN STAFF

America's best discount drugstore is run by the federal government.

The Department of Veterans Affairs throws the weight of federal buying power and a law mandating discounts on medicine into price negotiations with drug manufacturers.

"We're the big gorilla," said George T. Patterson, executive director and chief operating officer of the VA Office of Acquisition and Materiel Management. "We get the drop-dead best prices in the world."

FOR THE RECORD - An article in Wednesday's editions on the Department of Veterans Affairs' drug prescription program included an incorrect reference to the number of prescriptions filled by the VA last year. The agency filled about 200 million prescriptions in 2003. The Sun regrets the error.

The VA drug benefit is a life preserver for vets like Vernon Chapin, 76, a retired plumber and Army veteran from Lutherville. Chapin pays a total $56 a month for eight prescriptions to keep his blood pressure, diabetes and other health woes in check. Other veterans who have service-related illnesses or injuries get free medicine for those ailments.

"I shudder to think what would happen to me without the VA," Chapin said. "I'd be making a choice between eating and taking my drugs."

The VA's muscular approach to drug purchasing is the envy of private employers and insurers struggling with rocketing prescription prices that are the highest in the world. The VA, by contrast, pays roughly half of U.S. retail pharmacy prices.

VA volume buying power - the agency negotiates for itself, the Department of Defense, the Public Health Service and the Coast Guard - is the model for Maryland and other states forming multistate pools to leverage better drug prices for Medicaid recipients and state employees. It is also the model favored by congressional Democrats and consumer advocates for the massive new Medicare drug program.

A group of Senate Democrats, including Barbara Mikulski of Maryland, called on the Department of Health and Human Services last week to adopt a VA-style program for Medicare. The Medicare benefit crafted by Republicans and signed into law by President Bush last year bars the department from using Medicare's 41 million beneficiaries to leverage lower prices from drug companies. The law instead turns to private companies to cut deals with manufacturers. The benefit, which starts in 2006, carries a $530 billion price tag for its first decade.

"Rather than using the purchasing power of Medicare's 41 million beneficiaries, the new law fragments the population, diluting the ability to negotiate lower prices," the senators wrote HHS Secretary Tommy Thompson. "This is not only a waste of limited taxpayer resources, it is also a cruel betrayal of Medicare beneficiaries who are struggling with astronomical drug bills."

The administration opposed efforts to give Medicare negotiating power akin to the VA's for fear that its huge volume would become a national price control and deprive pharmaceutical companies of cash needed for drug research and development.

The VA represents a much smaller buying pool. While there are 24.5 million veterans, only 6.1 million of them were treated at VA medical centers last year, with 4.5 million getting prescriptions. The VA filled about 200 prescriptions last year, spending about $3 billion a year on drugs, up from $750 million in 1991.

Some worry that the VA's successful drug program is in danger of being swamped by growing numbers of veterans seeking refuge from rising prices of medication elsewhere.

Tens of thousands of veterans who face spiraling copayments and premiums in their private health plans are lining up for the VA drug benefit. If enough are allowed to tap the benefit - as they were promised when they joined the military - some fear they could sink VA's shaky overall health care budget.

About 20 percent of the veterans who use the VA each year do so solely because of its drug benefits, according to an agency survey. But nearly 90 percent of the approximately 164,000 veterans who sought enrollment to the VA system last year wanted the drug benefit above all, according to the VA inspector general. Those veterans are barred from the system by an agency decision in January 2003 to save money by closing its doors to "high-income" applicants who make more than $25,000 a year and do not have service-related health problems.

Edward L. Clark, an Army veteran from Greencastle, Pa., is among those blocked from the system. Clark, 57, sought VA benefits when his income from selling telecommunications equipment went into a tailspin and he could no longer afford $500 a month for private insurance. "Now I'm going to take my chances without insurance or medication," he said. "If I get sick, I'll go to an emergency room."

With both Democrats and Republicans vying for the votes of veterans in this election year, Congress is considering legislation that would help veterans such as Clark by opening the VA drugstore to more veterans.

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