US Democrats have this week introduced legislation into Congress that would require drugmakers to provide rebates to the government on prescription drugs used by people enrolled in both the Medicare prescription drug (Part D) and Medicaid health programmes.

The Medicare Drug Savings Act has been introduced into the Senate by a group of 19 Democrat Senators, and a companion bill in the House is sponsored by five Representatives. They point out that, with the exception of Medicare Part D, all large US purchasers of prescription drugs negotiate better prices, including Medicaid, and their bills would simply restore negotiated prices for these "dual-eligibles," who are predominantly low-income seniors and people with disabilities. 

Before the creation of Medicare Part D in 2006, brand-name drugmakers paid rebates for Medicare/Medicaid dual-elegibles, whose prescription drugs were discounted by rebates negotiated by the federal government. Some also received additional discounts negotiated by state Medicaid plans.

The sponsors say their legislation, which would reduce the federal deficit by $141.2 billion over the next 10 years, would also "correct excessive payments to drug companies, while also saving taxpayers and the federal government from footing the unnecessary cost."

"Over the past 10 years, the 11 largest drug companies alone took in $711.4 billion in profits, including a 62% increase from 2003 to 2012,” they add.

"For years, drug companies have received a taxpayer-funded windfall on their prescription drugs for people eligible for both Medicare and Medicaid, allowing them to charge higher prices than ever before for low-income seniors," said one Senate bill sponsor, West Virginia Senator Jay Rockefeller.

"This bill would make sure drug companies no longer receive this unnecessary and expensive payment. It would responsibly help to reduce the deficit, without impacting Medicare beneficiaries, by making sure drug companies don't get more than they're due," he said. 

The bill "will help fix a broken system" and is "a commonsense solution that will produce cost savings and efficiencies in Medicare instead of windfall profits for drug companies. By allowing the government to negotiate prices on prescription drugs for seniors, we will save taxpayers money and strengthen Medicare," added Wisconsin Senator Tammy Baldwin.

However, drugmakers have described the proposals as "mandatory government price controls in Medicare Part D, cleverly disguised as 'rebates'," and warni that these would be sent to the Treasury, not to seniors, and would undermine Part D.

"In Medicare Part D, as in the broader market for prescription drugs, large and powerful private insurers and pharmacy benefit managers negotiate discounts and rebates. Some of these purchasers represent total patient populations equal in size to the population of some European G-8 countries, and also negotiate on behalf of private employers and the Federal Employee Health Benefit Program (FEHBP),” Matthew Bennett senior vice president at the Pharmaceutical Research and Manufacturers of America (PhRMA), pointed out.

The competition between health plans in Part D is the secret to its ability to offer beneficiaries broad choice and high enrollee satisfaction at an affordable premium and, as a result, prescription drug costs in Part D are hundreds of billions of dollars less than projected, he said.

"The fact is that Part D is working for seniors and taxpayers. It has greatly achieved seniors' access to medicines, held down premiums, achieved billions of dollars of savings on other Medicare costs by improving health, and cost hundreds of billions of dollars less than projected," said Mr Bennett.

In contrast, he went on, the Democrats' proposed legislation "would bring higher premiums and co-pays, more restricted access to medicines for seniors and Americans with disabilities, and diminished research on the next generation of medicines."