The U.S. Medicare program was established in 1965. It provides health insurance today to 43.4 million seniors and Americans with disabilities.  In 2003, the U.S. government introduced sweeping changes to the Medicare program by enacting the Medicare Prescription Drug, Improvement, and Modernization Act (MMA). The most significant of these changes was the establishment of a new Medicare drug program. Now, for the first time in Medicare history, all beneficiaries, regardless of income, have access to comprehensive, federally-subsidized, outpatient prescription drug coverage. The new Medicare drug coverage provides extra help with drug costs for qualified low-income beneficiaries, and it is designed to harness market competition to provide choice in coverage options and preserve incentives for pharmaceutical innovation. Merck strongly supports the Medicare prescription drug program. Prescription drugs are an integral part of modern health care, and the new Medicare prescription drug program is vital to helping people with Medicare access the medicines they need.

Competition differentiates the new Medicare drug program from the way most people now get coverage for other health care services under Medicare and from the way government prescription drug benefits are provided in other countries. The new Medicare drug benefits are not delivered through a single plan determined by the U.S. government. Instead, private companies compete for Medicare enrollments by offering drug plans with varying benefits-different premiums, deductibles, co-payments, pharmacies and covered drugs. Each plan must fulfill certain government-set standards, but Medicare beneficiaries can choose among all the plans offered in their region to find the benefit structure that best meets their needs. In other words, the new Medicare drug benefit operates like private commercial insurance rather than like the older parts of Medicare (e.g. Medicare Parts A and B) that rely on price controls to contain the costs of medical services. Proponents of the new Medicare drug coverage support the program's private-sector design and champion the competition and consumer choice among coverage options as the hallmarks of an improved Medicare program. 

Merck strongly supports the private-sector design of the new Medicare prescription drug benefit and is encouraged by early analysis that shows the new benefit is delivering real value to people with Medicare. For example, the Centers for Medicare and Medicaid, credits competition among private plans for helping to lower the average monthly premium for a Medicare drug plan to just $25—one-third lower than the 2005 government estimate. Many beneficiaries who have already enrolled in the new coverage are enjoying significant savings on their drug costs and, of course, peace of mind knowing they have long-term protection from catastrophic prescription drug costs. Overall, the new Medicare prescription drug coverage strikes a good balance in giving people with Medicare guaranteed coverage while avoiding the kind of limited choices, price controls, and government restrictions that ultimately stifle innovation in health care.

Merck supports the new Medicare prescription drug coverage and will continue to support the benefit's implementation so that seniors and Americans with disabilities have access to the medicines they need.