GUEST COMMENTARY: Medicare Part D is healthy for Hoosiers

2012-11-04T00:00:00Z GUEST COMMENTARY: Medicare Part D is healthy for HoosiersBy Stephen McCaffrey
November 04, 2012 12:00 am  • 

Indiana is fortunate to be home to a biopharmaceutical industry that is healthy for Hoosiers. The industry creates new technologies for medical treatment as well as a significant number of local jobs.

Unfortunately, this valuable health and economic resource might be negatively impacted by policies being considered by Congress, particularly as they relate to Medicare and the Medicare Part D drug benefit for low-income beneficiaries.

Medicare Part D expands access to cutting-edge prescription drugs for American seniors, including critical mental health medications.

Recipients benefit from a program that is both accessible and affordable.

Since its creation in 2006, Part D's competitive structure has proven cost-effective and efficient. This is achieved through a competitive market structure that ensures private insurance companies offer the highest value coverage packages for seniors, while the federal government subsidizes the premiums. Plan providers negotiate payments with drug companies and pharmacies, and the savings are passed on to seniors in the form of lower premiums. Seniors are overwhelmingly pleased with the wide variety of available low-cost drug plans that are costing taxpayers much less than anticipated.

Hoosiers can choose among 31 unique Part D plans, some with premiums as low as $14.80 per month. Last year, the Department of Health and Human Services announced the average premium nationally for a Part D plan would fall from $30.76 to about $30. That's 44 percent below the average premium projected when the program began.

Here in Indiana, local pharmaceutical firms are hard at work developing innovative new treatments. In 2010, there were over 1,600 active drug trials in Indiana alone. Part D's success has also had the effect of creating a climate that encourages investment to fuel new research lines, which in turn generates new jobs and economic opportunity. Most importantly, this research and development has benefited countless persons with mental illness, many of whom can now lead productive lives in the community by accessing these new medications.

Of concern, however, is a proposal to require drug companies to pay more for seniors on Part D who are low income and receiving Medicaid. These "rebates" would essentially require drug companies to provide drugs at a cost that is below the market rate. The likely result would be that pharmaceutical manufacturers would raise drug prices for everyone else and reduce investments in research and development.

In Part D, that means most enrollees would see their premiums rise. Research by the Lewin Group found that rebates would raise drug prices for all other seniors by as much as 50 percent. Such a price jump would seriously compromise enrollee care and limit access to vital prescription meds.

In addition to the potential negative impact on access, rebates in Part D could also negatively impact jobs in Indiana, as a result of a likely reduction in investment dollars. More importantly, reductions in investment would lead to fewer advancements in the treatment of mental illness and fewer life-saving treatments generally.

Home to some 825 bioscience companies, Indiana is one of the premier drug development centers in the United States. Several leading bioscience firms -- including Biomet, DePuy Orthopaedics, Eli Lilly and Company, and Zimmer -- are globally headquartered here.

Each year, Indiana-based pharmaceutical powerhouses contribute to a life science industry that delivers a $44 billion economic impact to the state. Eli Lilly and Co. is now the 10th largest pharmaceutical company in the world. In 2011, the firm spent more than $1.025 billion locally involving over 1,300 Indiana vendors.

Biotech firms such as these also provide thousands of well-paying jobs to state residents. In fact, Indiana now leads the country in life science jobs, employing nearly 60,000 residents in this sector.

Changes in Medicare Part D could compromise this impressive job figure, as well as investments in mental health and treatments for all Hoosiers.

Indiana leaders should understand that protecting Part D is vital to keeping Indiana's seniors -- as well as Indiana's economy -- healthy.

Stephen McCaffrey is president and CEO of Mental Health America of Indiana. The opinion expressed in this column is the writer's and not necessarily that of The Times.

Copyright 2014 All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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