Monday, November 24, 2003

Medicare Debate Turns to Pricing of Drug Benefits:
"With Congress poised for final action on a major Medicare bill this week, some of the fiercest debate is focused on a section of the bill that prohibits the government from negotiating lower drug prices for the 40 million people on Medicare.

That provision epitomizes much of the bill, which relies on insurance companies and private health plans to manage the new drug benefit. They could negotiate with drug companies, but the government, with much greater purchasing power, would be forbidden to do so."


Supporters of the provision say it is necessary to prevent the government from imposing price controls that could stifle innovation in the pharmaceutical industry. Critics say the restriction would force the government and Medicare beneficiaries to spend much more for drugs than they should.

The House passed the Medicare bill on Saturday by a vote of 220 to 215, after an all-night session and an extraordinary three-hour roll call. President Bush and House Republican leaders persuaded a few wayward conservatives to vote for the bill, which calls for the biggest expansion of Medicare since its creation in 1965.

In the Senate, debate continued on Sunday, with Democrats asserting that the bill would severely undermine the traditional Medicare program. Senator Edward M. Kennedy, Democrat of Massachusetts, said he would lead a filibuster against the measure.

Democrats acknowledged they did not have the votes to sustain a filibuster. But they said they would use points of order to slow the legislation, whose passage is a priority for President Bush.…

No provision has been mentioned more often in Congressional debate than the section that prohibits the government from interfering in negotiations with drug companies.

Democrats have repeatedly asserted that Medicare could provide more generous drug benefits if, like other big buyers, it took advantage of its market power to secure large discounts.

But many Republicans have expressed alarm at the possibility that federal officials might negotiate drug prices. The Medicare program, they say, dwarfs other purchasers, and the government is unlike other customers because it could give itself the power to set prices by statute or regulation, just as it sets the rates paid to doctors and hospitals for treating Medicare patients.

Under the bill, the government would subsidize a new type of insurance policy known as a prescription drug plan.

"In order to promote competition," the bill says, the secretary of health and human services "may not interfere with the negotiations between drug manufacturers and pharmacies and prescription drug plan sponsors, and may not require a particular formulary or institute a price structure for the reimbursement" of drugs.…

Representative Tom Allen, Democrat of Maine, said it struck him as absurd that "the government will not be able to negotiate lower prices" for the drugs on which it plans to spend $400 billion in the next decade.

"The bill will allow the pharmaceutical industry to continue charging America's seniors the highest prices in the world," Mr. Allen said.

Representative Peter A. DeFazio, Democrat of Oregon, said, "We could provide a much more meaningful benefit if we negotiated lower prices as other nations have done."

Representative Rahm Emanuel, Democrat of Illinois, said: "We could bring down drug prices if we allowed the secretary of health and human services to negotiate on behalf of 40 million seniors. That is what Sam's Club does."

http://www.nytimes.com/2003/11/24/politics/24MEDI.html?pagewanted=all&position=

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