Dear Senators and Representatives:
In the final months of the Obama Administration, the White House and Congress will engage in another round of negotiations regarding government spending. The President and his allies will likely continue to support a proposal to raid the Medicare prescription drug benefit program to pay for high spending levels in other areas of government. On behalf of the millions of Americans that our organizations represent, we encourage you to oppose misguided Medicare Part D rebate proposals.
Although Medicare Part D is far from perfect, and many of the signatories opposed the program's creation, the program has successfully used market mechanisms such as competition and choice to improve access and control costs. Through negotiations between insurers and pharmaceutical companies, seniors can purchase drugs at lower prices, often as much as 30 percent off the sticker price of brand-name drugs. As a result, Part D has cost taxpayers 45 percent less than originally estimated in the first decade following enactment, an anomaly among government programs.
The President proposed in his 2017 budget request to repeal the non-interference provision at the heart of this successful competitive market in favor of government price-setting. The budget would also require pharmaceutical companies to “rebate” up to 40 percent of their drug sales back to Medicare. This is not a “rebate” in any true sense of the word. Rather, this is an attempt to force drug makers to sell to insurance companies at a loss, as the government does with the poorly-performing Medicaid program. Government forcing companies to turn money over to the Treasury is not a rebate, it’s a tax.
This tax will have a significant impact on the market. Drug companies will respond by embedding the cost of the tax in the price of their drugs, driving up the total cost of insurance. Increasing the price of insurance—due to direct government involvement—is a de facto tax increase on America’s seniors. We urge you to oppose any attempts to effectively tax the Medicare Part D program for more reckless spending. This is not savings, nor is it entitlement reform—it’s more accurately called a tax hike.
Sincerely,Brent Gardner, Vice President of Government AffairsAmericans for Prosperity Jim Martin, Chairman60 Plus Association Phil Kerpen, PresidentAmerican Commitment Dan Schneider, Executive DirectorAmerican Conservative Union Sean Noble, PresidentAmerican Encore Dee Stewart, PresidentAmericans for a Balanced Budget Coley Jackson, PresidentAmericans for Competitive Enterprise Peter J. Thomas, ChairmanAmericans for Constitutional Liberty Andrew F. Quinlan, PresidentCenter for Freedom and Prosperity Jeffrey Mazzella, PresidentCenter for Individual Freedom Tom Brinkman Jr., ChairmanCoalition Opposed to Additional Spending and Taxes (COAST) Gregory Conko, Executive DirectorCompetitive Enterprise Institute Dan Caldwell, Vice President for Legislative and Political ActionConcerned Veterans for America David Bozell, PresidentForAmerica George Landrith, PresidentFrontiers of Freedom Joseph Bast, President and CEOThe Heartland Institute Sabrina Schaeffer, Executive DirectorIndependent Women's Forum Heather R. Higgins, President and CEOIndependent Women’s Voice Seton Motley, PresidentLess Government Colin A. Hanna, PresidentLet Freedom Ring Daniel Garza, Executive DirectorThe LIBRE Initiative Harry C. Alford, President/CEONational Black Chamber of Commerce Amy Ridenour, ChairmanNational Center for Public Policy Research Pete Sepp, PresidentNational Taxpayers Union William Whipple III, PresidentSecure America's Future Economy David Williams, PresidentTaxpayers Protection Alliance