Administration now says Medicare drug benefit will cost $720 billion

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The administration has raised the estimated price tag for the Medicare prescription drug benefit, to a total of about $720 billion over the next 10 years, starting in 2006. That led top Congressional figures, including Sens. John McCain (R-AZ) and Ted Kennedy (D-MA), to reiterate a call to allow the federal government to negotiate drug prices with pharmaceutical companies.

Previously, the administration tagged the cost of the new drug plan at $534 billion for the 2004 to 2013 decade, while the Congressional Budget Office had said the plan would cost $395 billion over that period.

Centers for Medicare & Medicaid Services Administrator Mark B. McClellan announced on Tuesday that the higher estimate was due to the addition of two years at the end in which benefits will be drawn upon, and the dropping of two years at the beginning (2004, 2005) in which the benefit was not in place.

He said the year-to-year estimate of the drug benefit by CMS has not changed. Annually, the cost of the Medicare prescription plan is estimated at more than $107 billion.