On December 8, 2003, the President signed the Medicare Prescription Drug Coverage, Improvement, and Modernization Act of 2003, which added a prescription drug benefit as part of the Medicare program starting in 2006.

The impact of the legislation on pharmaceutical industry profits is the subject of some controversy. A recent study by academics estimates that the Medicare prescription drug benefit would increase profits in the pharmaceutical industry by $139 billion, or 38 percent, between 2006 and 2013. The study, written by Alan Sager and Debora Socolar of Boston University, has been widely quoted by critics of the recently enacted Medicare legislation. These results stand in stark contrast to the opinion of financial analysts who track developments in the pharmaceutical industry.

The Pacific Research Institute (PRI) retained the Health Policy Economics group of PricewaterhouseCoopers (PwC) to examine the Sager-Socolar claims and findings, and additionally to analyze the impact of this legislation on pharmaceutical companies.