Who's Benefiting from the Medicare Drug Plan?

With crucial congressional midterm elections less than two months away both parties are angling to score points for their side over the controversial Medicare prescription drug program that went into effect at the beginning of this year.

Tuesday brought good news for the Republicans. J.D. Power and Associates released its survey of more than 3,400 Medicare beneficiaries, three-fourths of whom said they're satisfied with the federally backed drug plan they picked. The program got off to a rocky start at the beginning of the year, when millions of seniors were frustrated by the sign-up process for the complex benefit or couldn't get their drugs after they enrolled because of computer glitches. But J.D. Power found that 45% of the seniors surveyed between June and September said they were "delighted" with their new coverage (giving it a 10 on a 10-point scale) while another 30% said they were "pleased" (rating it an eight or a nine). That survey — and three previous ones that came up with similar results — prove that the program "has provided overwhelming beneficiary satisfaction and significant cost savings," claims Jeff Nelligan, a Medicare spokesman.

But House Democrats were just as quick to point to another group that's benefited from the new program: the pharmaceutical industry, which spent millions lobbying Congress two years ago to shape a drug bill to its satisfaction. On Tuesday the Democrats released their own report showing that profits for the 10 largest pharmaceutical companies increased by more than $8 billion during the first six months of the new Medicare program. From January to June, the top 10 drug manufacturers raked in $39.8 billion in profits, according to the Democratic report, a 27% jump over profits for the same period in 2005.

The "Democratic Truth Squad" report, written by the House Government Reform Committee's Democratic staff, cites three reasons for the surge in profits. Millions of seniors who previously had no drug insurance coverage now do and, as a result, are buying more medications. That means more sales for the pharmaceutical companies. The Republican-controlled Congress also refused to allow Medicare to bargain with the drug companies for lower prices, believing that competition in the marketplace would keep them down. "But there has been little evidence of declining prices," the report claims.