The drug discount benefits associated with the major expansion of Medicare passed late last year are not living up to proponents' hype.

Not surprisingly, the new Medicare drug discount card program launched earlier this month has turned out to be complicated and confusing.

In addition, the discounts on prescription drugs are often minimal - especially compared to prices for the same drugs imported from Canada or available to U.S. veterans receiving drug benefits through the Department of Veterans Affairs.

It's no secret that volume buying is the reason drug prices are so much lower in Canada and through the VA.

Buying anything in large quantities produces lower prices. This economic truism is as irrefutable as the law of supply and demand.

Following complaints from seniors about the complexity of the drug discount card program and about the less-than-expected cost savings, lawmakers in Washington, D.C., are now scrambling to make changes to the law.

Two of the most significant changes being considered are permitting drug re-importation from Canada and, more importantly, allowing Medicare to negotiate volume discounts from drug makers.

Families USA, a consumer group, conducted a recent study that found that the best prices available through the Medicare discount cards were still about 50 percent higher than prices negotiated by the Department of Veterans Affairs.

The VA throws its weight into negotiating volume prices from pharmaceutical companies. "We're the big gorilla," is the way George Patterson, executive director of the VA Office of Acquisition and Material Management, put it recently.

The VA represents 24 million veterans, but only about t4.5 million are getting prescriptions. Imagine the leverage Medicare could apply to prices when negotiating on behalf of 41 million beneficiaries.

Earlier this month, 50 of the largest U.S. employers announced they were forming a buyers' club to negotiate lower drug prices for their active and retired workers and their families. These major corporations see volume buying as a way to help hold down their soaring health care costs.

It seems obvious that Medicare should use its unmatched buying power to lower drug prices for beneficiaries. Yet, this obvious solution was specifically barred in the 2003 legislation that created the drug discount card program and expanded Medicare.

The only conclusion to be drawn from the prohibition on Medicare negotiating lower prices from drug companies is that the drug companies helped write the legislation and didn't want to face the prospect of deeply discounted drugs driven by Medicare's buying power. The drug companies apparently thought they could offer some minimal discounts through the complicated card program, while preventing Medicare from doing what the VA already does and negotiating for really significant savings.

Promoting the new Medicare programs last week, President George W. Bush boasted that seniors can save 15 percent on brand-name drugs and nearly 30 percent on generic drugs.

By contrast, the Department of Veterans Affairs generally saves about 50 percent off the average wholesale price (AWP) of a drug. The Canadian government's negotiations with U.S. drug makers generally produce prices about 40 percent off the AWP.

The best way for seniors to enjoy significant savings on their drug costs is for Medicare to negotiate deeply discounted prices. The leading pharmaceutical companies fear this hit to their bottom lines and have warned that the economic impact will reduce research and development spending to develop new "miracle" drugs.

But it is time to end the absurd practice of having American consumers carry the load for drug companies' R&D, while Canadian consumers and veterans enjoy the benefits of discounted prices.

As happens too often in Washington, special interests distorted the legislative process so that the final outcome benefited special interests more than the American public.

Unable to defend the obvious flaws in the current law, Congress should make changes so that Medicare is allowed to negotiate the lowest possible drug prices for its beneficiaries, just as the VA and the Canadian government have been doing.