Rising cost projections for the new Medicare drug benefit alarmed U.S. lawmakers on Wednesday and set off renewed calls to restrain spiraling drug prices and allow pharmaceutical imports from Canada.

Facing a projected $724 billion cost over a decade, many lawmakers urged Congress to change the new Medicare law by granting the government power to negotiate drug prices directly with pharmaceutical companies. The law prohibits such negotiations for Medicare, the government health insurance plan for the elderly.

Other House and Senate members promoted legislation that would allow Americans to buy less expensive drugs from Canada. North Dakota Democratic Sen. Byron Dorgan and Maine Republican Sen. Olympia Snowe introduced a revised version of their drug import bill. Similar legislation passed the House in the last Congress but never got a Senate vote.

“We now have the worst of all worlds - skyrocketing costs and not a good benefit,” said Michigan Democratic Sen. Debbie Stabenow, an advocate of Canadian drug imports and of allowing the government to negotiate prices for bulk purchases.

Stabenow and other Democrats had supported more spending on drugs but said the plan drafted by the Republican-controlled Congress directed too much money to drug companies and insurers, and not to needy older Americans.

Iowa Republican Rep. Steve King also introduced a bill calling on Medicare not to pay for “recreational sex drugs” such as Viagra.

The Republican congressional leadership has generally opposed both importation and price negotiations. A main author of the Medicare drug law, Senate Finance Committee Chairman Charles Grassley, said he did not want to start rewriting a law in 2005 that will not be fully phased in until 2006.

“We aren’t going to take another look at it for a couple of years,” said Grassley, an Iowa Republican. “How do you know what’s wrong with it before you operate it for a while?”

“UNFUNDED LIABILITY”

President Bush said he would try to bring Medicare finances under control after he finishes his push for changes to Social Security.

“There’s no question that there is an unfunded liability inherent in Medicare that…Congress and the administration is going to have to deal with over time,” Bush told reporters.

The head of Medicare, Mark McClellan, said the new White House estimate of $724 billion over 10 years was not inconsistent with an earlier $534 billion estimate because it encompassed a different time frame. White House officials said earlier Wednesday it would cost $720 billion to $723 billion.

The Congressional Budget Office, while standing by its initial estimate Medicare changes would cost under $400 billion for the first 10 years, released its own estimate that the drug benefit would reach $598 billion, higher than the administration estimate.

For both estimates, the new 10-year window goes to 2015 and includes a fully phased-in drug benefit with more retired baby boomers on Medicare. The earlier 10-year estimate to 2013 included fewer boomers and two years without a drug benefit. Medicare officials said about 9 million more people would be eligible for a drug benefit in 2015 than in 2006.

“We are looking further out to the future when more Medicare beneficiaries are getting more Medicare benefits,” McClellan said. Medicare in the past did not cover most drugs.

The gross cost of the Medicare drug benefit is actually around $1.2 trillion over 10 years, but the White House said that excluded payments from premiums, states and cost savings in the state-federal Medicaid system, which covers some of the poorest Medicare patients.

Some lawmakers said whatever the budgetary technicalities, the bottom line is the benefit cost a lot and costs would explode over time.

“I’m cynical about all the estimates,” said New Hampshire Republican Judd Gregg, chairman of the Senate Budget Committee.