From an interview with Marcia Angell, a senior lecturer at Harvard Medical School and former editor in chief of The New England Journal of Medicine, in the New York Times:

Q. The first phase - the discount card phase - of the new Medicare drug benefit is about to go into effect. Do you, as a newly minted senior, believe it will make prescription drugs more affordable?

A. It's not going to have a major effect. These discounts are very small, maybe 10 to 15 percent. At the rate of inflation of drug prices, they'll be overtaken in a very short time.

Now, the main Medicare drug benefit that goes into effect in 2006 is designed to funnel billions of dollars to the pharmaceutical industry. It's an absolute bonanza for it. The pharmaceutical industry's lobbyists made certain that the legislation contained a provision barring Medicare from negotiating drug prices.

Interestingly, the federal government negotiates drug prices for the Veterans Affairs system and gets very low prices because it is a bulk purchaser. And Medicare would have been the biggest bulk purchaser of all - so it could have negotiated very low prices. That provision allows the drug companies to continue raising their prices faster than the inflation rate, and the drug benefit will soon become unaffordable.