Jeff Bingaman United States Senator from New Mexico

WASHINGTON – U.S. Senator Jeff Bingaman has joined Senator Jay Rockefeller in introducing legislation that would require prescription drug manufacturers to offer discounts to low-income patients receiving their medications through Medicare.  It is estimated that the bill would save Medicare $112 billion over the next ten years.

Under current law, drug manufacturers provide rebates for medications offered to Medicaid beneficiaries.  The same prescription medications offered through Medicare Part D, however, are not subject to these discounts.

The Medicare Drug Savings Act of 2011 seeks to save billions of dollars in Medicare Part D by requiring drug manufacturers to offer a discount to so-called "dual eligibles" -- patients who are simultaneously enrolled in Medicaid and Medicare -- or for beneficiaries enrolled in Medicare Part D "extra help."

"There is a lot of talk in Washington about how to cut Medicare costs without harming health care.  This is one obvious way," Bingaman said.  "The Medicare Drug Savings Act would save $112 billion over the next decade, which will help to strengthen Medicare."

The amount of the rebate that manufacturers offer to Medicaid beneficiaries is tied to the average price wholesalers pay manufacturers for drugs that are sold to retail pharmacies.   For brand-name drugs, the discount is 23.1 percent of the average wholesalers pay; for generic drugs it is 13 percent.

Under the Rockefeller-Bingaman proposal, drug companies would be required to pay the Medicaid rebate to the Medicare program to ensure that the federal government received the best price possible for these drugs.  Prior to the creation of the Medicare drug benefit in 2003, all of the drugs purchased for "dual eligibles" received this rebate.  The Rockefeller-Bingaman amendment returns to this policy and expands it to include Medicare recipients who receive "extra-help."

The bill has been sent to the Senate Finance Committee; Bingaman is a senior member of that panel.