Ensuring access to affordable drug coverage in Medicare

The long-awaited outpatient prescription drug benefit in Medicare began January 2006. Despite its importance, the drug benefit is controversial. Instead of paying directly for prescriptions, the program will operate through competing private plans. Although it is too early to assess the full impact of Part D on beneficiaries, health plans and providers, employers, and taxpayers, we can discuss the major tradeoffs that will determine the success of the program. Key issues include whether market-based approaches will be more effective than direct government intervention in limiting spending; how will beneficiaries, drug plans, employers, and States adapt to the new program; and the balance between cost containment and access to innovative pharmaceuticals.