The law was passed despite two attempted filibusters in the Senate and an earlier roll-call vote in the House of Representatives - the first time in history that this has occurred - and the only outstanding requirement is President George W Bush's signature.
The legislation will provide drug cover for the elderly and disabled by tapping into the resources of the private-sector. Before now, Medicare provided no cover for prescription drugs, with patients relying on private health insurers, schemes set up by their employers (which in some cases would continue after retirement) or out-of-pocket payments.
Initially, the elderly and disabled will be eligible for a Medicare card that could provide savings of 10 to 25 per cent on their prescription drugs. After 2006 they will be able to make payments of around $35 a month to enter a scheme in which they pay the first $275, but only 25 per cent of the cost over that value and below $2,200. If the costs rise above $3,600, the individual will only pay 5 per cent of the cost.
Other claimed benefits include making it easier for generic drugs to reach the market and a reduction in employers' contributions into retiree schemes.
The US Biotechnology Industry Organization called the bill 'landmark legislation' that will ensure that patients who need biotechnology drugs the most will have access to them. It also removes a major layer of uncertainty for companies and investors developing these medicines, by stabilising and protecting federal reimbursement of biotechnology products and other drugs, said BIO president Carl Feldbaum.
Three months after the bill is enacted, Medicare will launch a $500 million demonstration project covering oral cancer drugs and self-injectable biotechnology products for rheumatoid arthritis and multiple sclerosis, something that it has never previously covered, he added.
Feldbaum also welcomed the bill's reversal of this year's Medicare cuts to biotechnology drugs used in the outpatient setting and a ban on applying the concept of functional equivalence, which has an impact on the development of generic biopharmaceuticals.