After a bitter legislative fight, the US Congress passed a $395 billion revision of Medicare, the health insurance programme for elderly people, which will come into effect in 2006.

The Medicare Drug Benefit bill institutes far-reaching revisions of the popular programme created in 1965. The addition of outpatient prescription drug benefits attracted support from many quarters. But the bill's inclusion of privatisation schemes created a bitter divide with critics charging that the bill is the first step toward the dismantling of Medicare.

President George Bush's administration supported the bill saying its provisions encouraging privatisation create competition that will keep costs down and give elderly people a better range of choices.

Soaring drug costs fuelled the battle over changes in Medicare. Drug prices in the United States, often four to 10 times higher than in Canada and Europe, triggered a movement to legalise the reimportation of drugs. But the new Medicare drug plan prohibits both drug reimportation and price negotiations by Medicare.

“[This …