Ensuring Access tp Affodable Drug Coverage in Medicare fee-for-Service Medicare in a Competitive Mar

The long-awaited outpatient prescription drug benefit in Medicare began January 2006. Despite its importance, the drug bene-fit 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 provid-ers, 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 inter-vention in limiting spending; how will ben-eficiaries, drug plans, employers, and States adapt to the new program; and the balance between cost containment and access to innovative pharmaceuticals.