MEDICARE DIRECT NEGOTIATION BILL PASSES HOUSE
The Democrats' plan to give the federal government the authority to negotiate for lower Medicare prices has taken another step forward as the House passed H.R.4 Jan. 12 by a vote of 255-170. However, the issue faces a tough road ahead as the president has threatened a veto and HHS alleges that the plan will result in little or no savings.
H.R.4, the "Medicare Prescription Drug Negotiation Act of 2007," would require the HHS secretary to negotiate with drug companies for better prices on Medicare drugs. The bill, sponsored by Reps. John Dingell (D-Mich.), Charles Rangel (D-N.Y.) and Jo Ann Emerson (R-Mo.), garnered bipartisan support, with 24 Republicans voting for it. The bill must now go to the Senate for consideration.
But H.R.4 faces numerous obstacles, including a threatened veto, HHS opposition and skepticism by other government entities.
The White House threatened a veto in a Jan. 11 statement of administration policy. "Government interference impedes competition, limits access to life-saving drugs, reduces convenience for beneficiaries and ultimately increases costs to taxpayers, beneficiaries and all American citizens alike," the statement said. "Furthermore, competition is reducing prices to seniors, providing a wide range of choices and leading to a more productive environment for the development of new drugs. If H.R.4 were presented to the president, he would veto the bill."
HHS Secretary Mike Leavitt rejected the proposal on the same grounds as the White House. "Government interference will result in fewer choices and less consumer satisfaction," he said in a Jan. 8 release.
Leavitt based his statement on a recent report by actuaries at the Centers for Medicare & Medicaid Services (CMS). The CMS report concluded that HHS would lack the ability to successfully negotiate without creating a formulary, an authority the bill does not provide.
The Congressional Budget Office (CBO) also recently said that the secretary would be unable to get better prices than those already obtained by prescription drug plans. However, the CBO said differently in a March 3, 2004, letter to Sen. Ron Wyden (D-Ore.). "There is potential for some savings if the secretary were to have the authority to negotiate prices with manufacturers of single-source drugs that do not face competition from therapeutic alternatives," the office said at the time.