Analysis: House Passes Part D Negotiation

By TODD ZWILLICH

The U.S. House of Representatives voted Friday to lift the ban on government from negotiations with the drug industry for lower Medicare prices.

The bill repeals language in the 2003 law creating the Medicare Part D prescription plan that explicitly excludes the government from bargaining with drug makers. It orders the secretary of health and human services to come up with a plan for the deals.

Democrats have long complained that the restrictions kept seniors’ prices in the Part D plan artificially high. They promised the vote as part of their agenda for the opening days of the Democratic-controlled House.

The bill rights a wrong included in the prescription drug act in 2003, said Rep. Fortney Pete Stark, D-Calif., chairman of the Ways and Means subcommittee with jurisdiction over Medicare.

Medicare covers some drug costs of approximately 4,400 drugs for Medicare’s 43 million beneficiaries.

All but 24 Republicans opposed the bill, many saying it was unnecessary because private insurers and others have already succeeded in extracting favorable price deals from drug companies. The bill passed 255-170.

The bill will not save seniors money, it will not save taxpayers money, and it will not save the government money, said Rep. Jim McCrery of Louisiana, the senior Republican on the Ways and Means Committee.

Even Democrats who supported the bill acknowledged that it would do little to immediately lower prices immediately.

While the bill orders HHS to negotiate on prices, it does not lift another legal restriction against using preferred drug lists called formularies at the federal level in the Part D program. Private companies do use formularies, but those companies already negotiate with drug makers.

The Congressional Budget Office concluded this week that the bill would have a negligible effect on seniors’ drug costs. CBO said that without a federal formulary, the government would lack the leverage to obtain significant discounts in negotiations.

Mark McClellan, the former Bush administration Medicare chief, came to Capitol Hill this week to argue against the bill.

There’s no evidence that these approaches would save money without restricting access. We need to address that carefully before changing the program, said McClellan, who now works at several Washington think tanks.

In an interview earlier this week House Ways and Means Committee Chairman Charles Rangel, D-N.Y., referred to the vote as ceremonial.

This is just the beginning of the process, Rangel said Friday during House debate.

Tony Snow, the White House press secretary, said Friday the president would reject the bill if it reached his desk.

We have a Medicare prescription drug reform that has been saving people significant amounts of money; it is effective. If this bill is presented to the president, he will veto it, Snow said.

But first it must go to the Senate, where lawmakers expect it to undergo substantial changes. At a hearing on drug prices this week Senate Finance Committee Chairman Max Baucus, D-Mont., said that a national formulary is not the answer because it would limit seniors’ access to drugs.

However, Baucus also cautioned, the total prohibition on negotiation should be eliminated.