Medicare Drug Coverage: Very Much Still a Work in Progress

Executive Summary

After decades of public policy debate, the passage of a prescription drug benefit for seniors-Medicare Part D-hardly settles the issue. Indeed, the heavy lifting really begins now because the recently enacted legislation represents a model drawn more in sand than stone. So there is plenty of time and opportunity for all parties to continue to shape this program more to their liking. For the moment, we do know that seniors are slated for drug coverage beginning in 2006 and price controls are off the table. But there are still major questions concerning the implementation. Looming over the whole debate: the specter of rising costs. The Congressional Budget Office's $400 billion prediction-for the ten years spanning 2004 to 2013-has already been characterized as too low. Bush administration aides estimates that the figure should be closer to $540 billion. Given all this uncertainty, the drug industry should be prepared for rough Medicare seas in the foreseeable future.