House Passes Bill That Would Require Federal Government To Negotiate Medicare Prescription Drug Prices
The House on Friday voted 255-170 to approve a bill (HR 4) that would require the HHS secretary to negotiate prices directly with pharmaceutical companies under the Medicare prescription drug benefit and report to Congress in six months, the Washington Post reports (Lee, Washington Post, 1/13). All House Democrats and 24 House Republicans voted in favor of the bill, which Democrats had pledged to pass in the first 100 hours of the 110th Congress. The bill states that the HHS secretary "shall negotiate with pharmaceutical manufacturers the prices that may be charged" to private Medicare prescription drug plans. The bill would allow insurers that sponsor Medicare drug plans to negotiate lower prices than those obtained by the government. The 2003 Medicare law prohibits the government from negotiating with pharmaceutical companies under the drug benefit (Pear, New York Times, 1/13). House Republicans introduced one motion that would have prohibited restrictions on access to medications and forbidden price negotiations to result in an increase in prescription drug prices under Medicare or the Department of Veterans Affairs' drug program. That motion failed 196-229 (Armstrong, CQ Today, 1/12). Supporters of the House bill project that it would save $96 billion over 10 years. However, the Congressional Budget Office last week released a report stating that the bill "would have a negligible effect on federal spending because we anticipate that the secretary would be unable to negotiate prices across the broad range of covered Part D drugs that are more favorable than those obtained by the prescription drug plans" (Krasner, Boston Globe, 1/13).
The bill "is unlikely to become law in its current form," the New York Times reports (New York Times, 1/13). White House Press Secretary Tony Snow said on Friday, "If this bill is presented to the president, he will veto it" (Pugh, McClatchy/Miami Herald, 1/13). Prospects for the bill in the Senate are "murkier" than in the House, according to the Post, which notes that "no companion bill has been introduced" (Washington Post, 1/13). A potential compromise bill introduced last week by Sens. Olympia Snowe (R-Maine) and Ron Wyden (D-Ore.) would require HHS to help negotiate prices for drugs that were developed with substantial funding from the federal government, and it also would require negotiations when a brand-name drug is available from only one manufacturer and no "therapeutic equivalent" or substitute is on the market (Kaiser Daily Health Policy Report, 1/12). Senate Finance Committee Chair Max Baucus (D-Mont.) on Friday said he would consider supporting negotiations legislation in the Senate if it were to "include some kind of instruction" to the HHS secretary on how to negotiate (Johnson, CongressDaily, 1/12).
House Energy and Commerce Committee Chair John Dingell (D-Mich.), the chief sponsor of the House bill, said Medicare "pays more than the VA pays for the same prescription pharmaceuticals," adding, "The reason is no one is able to negotiate on behalf of the citizens" (Washington Post, 1/13). Dingell said, "Those who insist that the sky will fall if drug companies negotiate lower prescription prices are arguing that those companies should continue to skin a fat hog at the expense of taxpayers and beneficiaries" (New York Times, 1/13). Dingell also said, "Forty-three million people can have the purchasing power to perhaps encourage these drug houses to give the government and the American retirees a better price" (Freking, AP/Detroit Free Press, 1/13). House Speaker Nancy Pelosi (D-Calif.) said, "As pharmaceutical companies reap record profits, it is clear that the president's flawed prescription drug plan is benefiting drug companies more than American seniors" (Mondics/Ginsberg, Philadelphia Inquirer, 1/14). HHS Secretary Mike Leavitt said, "There's just no evidence that government makes better choices for consumers on their health than consumers do for themselves" (Boston Globe, 1/13). Rep. Joe Barton (R-Texas), ranking member of the Energy and Commerce Committee, said, "It probably will never get out of the Senate, so maybe this is all just a political exercise." He added, "If there really is something wrong with (Medicare), let's fix it. But if it is not broke, then don't fix it" (Philadelphia Inquirer, 1/14).
The Pharmaceutical Care Management Association said the bill "would take the Medicare drug benefit in the wrong direction and potentially shift additional costs to private and public payers, including Medicaid and the Veterans Administration" (Lipman, Cox/Atlanta Journal-Constitution, 1/13). Billy Tauzin, president of the Pharmaceutical Research and Manufacturers of America, said the bill might lead Medicare to limit coverage of certain prescription drugs, adding, "That should not be acceptable to anyone" (Washington Post, 1/14). Biogen Idec spokesperson Tim Hunt said, "Our experience in Europe has been that negotiating with the government ends up with the government dictating prices" (Boston Globe, 1/13). Ian Spatz, vice president of public policy at Merck, said, "At times the pharmaceutical industry has said the sky will fall," adding, "That's not the case. But there could be less research and different kinds of research" (Philadelphia Inquirer, 1/14).
AARP CEO William Novelli in a statement said, "The American public overwhelmingly supports giving Medicare the power to bargain with manufacturers on behalf of beneficiaries for lower drug prices" (Boston Globe, 1/13). Novelli added, "Making prescription drugs more affordable is just one of the building blocks needed to ensure that Americans have the health and financial security they deserve" (Cox/Atlanta Journal-Constitution, 1/13). Bill Vaughn, a policy analyst at Consumers Union, said, "The House bill begins the process of bringing drug companies to the negotiating table and getting seniors and taxpayers real savings" (Washington Times, 1/13).
In related news, some House Democrats are pushing to reduce government subsidies paid to Medicare Advantage plans under the prescription drug benefit, the Wall Street Journal reports. Some Democrats maintain that lowering payments to MA plans could help offset increases in spending on other health programs, such as SCHIP or reimbursements to physicians under Medicare, the Journal reports. Rep. Pete Stark (D-Calif.) said, "There are precious few areas where we can save money. Medicare Advantage is a prime target to pick up a few dollars." According to the Journal, health insurers "are preparing their ... counterattack" to the potential proposal. America's Health Insurance Plans said that increasing enrollment in MA plans demonstrates beneficiaries' satisfaction with the program (Lueck, Wall Street Journal, 1/13).
NPR's "All Things Considered" on Friday reported on the House price negotiations bill. The segment includes comments from Barton; Stark; and Reps. Michael Burgess (R-Texas), Jeb Hensarling (R-Texas) and Walter Jones (R-N.C.) (Rovner, "All Things Considered," NPR, 1/12).
Audio of the segment is available online.