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Medicare Drug Program News
Critics Take Stage as Dems Push Bill Forcing
Medicare to Bargain on Drug Prices
Pelosi spokesman says savings should start
to close donut hole
 January 8, 2007 As Congress prepares to take
action this week on the Democrats proposal to require Medicare to
negotiate for lower prices from the drug companies (HR 4), a survey of
news reports by KaiserNetwork.org finds doubters and critics grabbing
the spotlight. Two items being most discussed are a portion of the bill
that prohibits Medicare from using a preferred list of drugs and
suggestions that the donut hole can be eliminated with savings from
lower drug prices.
 Critics
Question Democrats' Plan to Allow Federal Government to Negotiate
Medicare Prescription Drug Prices but Prohibit Preferred Drug List
House Democrats this week plan to seek passage of a
bill (HR
4) that would require the
HHS
secretary to negotiate directly with pharmaceutical companies on prices
for medications under the Medicare prescription drug benefit, the
Miami Herald
reports.
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January 4, 2007 - The Democrats took charge of Congress today with
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Medicare Drug Program News
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The legislation, sponsored by
House Ways and
Means Committee Chair Charles Rangel (D-N.Y.) and Rep. John
Dingell (D-Mich.), would require the HHS secretary to report to Congress
on the progress of the negotiations every six months (Pugh, Miami
Herald, 1/8). In addition, the bill would not allow the HHS secretary to
establish a formulary under the Medicare prescription drug benefit to
help negotiate lower prices for medications.
The House likely will vote on the legislation on
Friday, but the Senate "is expected to move more slowly," the
Los Angeles Times
reports (Alonso-Zaldivar, Los Angeles Times, 1/6).
The
Senate Finance
Committee on Thursday plans to hold a hearing on the
legislation. Meanwhile, Senate Majority Leader Harry Reid (D-Nev.) "has
introduced a placeholder bill (S 3) that is intended only to show that
Democrats want to 'provide for fair prescription drug prices for
Medicare beneficiaries,'" CQ Today reports (Reichard, CQ Today, 1/5).
Some Criticism
Some critics maintain that the provision in the
bill that would not allow the HHS secretary to establish a formulary
would take "away a powerful lever commonly used in such pricing
negotiations," the Los Angeles Times reports.
Robert Laszewski, a consultant to health insurers
and other health care companies, said, "If you don't have the power to
bump a drug off the formulary, you have no negotiating clout. Any good
capitalist will tell you that you can't negotiate with somebody unless
there is the expectation that you may not purchase their product" (Los
Angeles Times, 1/6).
Alan Garber, director of the
Center for Health
Policy at Stanford University, said, "To obtain drugs at low
prices, a purchaser must be able to say no to covering a particular
drug" (Pear,
New York Times,
1/7).
An unnamed House Democratic leadership aide said
that the provision is a "trade-off" because Democrats "felt we couldn't
go as far" as the
Department of
Veterans Affairs, "where they actually take drugs off the
formulary."
AARP
Federal Affairs Director David Certner said of the bill, which the group
supports, "It takes one tool away, but that's not the whole story here."
According to Certner, under the legislation the HHS secretary would have
the ability to increase copayments for medications manufactured by
pharmaceutical companies that do not agree to lower prices.
Ron Pollack -- executive director of
Families USA,
which supports the bill -- said, "If that provision wasn't in there, the
drug companies would probably be going nuts." He added that the
provision "makes it politically palatable without harming the intent of
giving the (administration) the obligation to bargain" (Los Angeles
Times, 1/6).
Elimination of the 'Doughnut Hole'?
In related news, a number of experts have said that
savings from the legislation would not eliminate the so-called "doughnut
hole" coverage gap in the Medicare prescription drug benefit.
The
Congressional
Budget Office has estimated that the elimination of the
doughnut hole would cost $450 billion over 10 years but has not
estimated savings from the bill.
Brendan Daly, a spokesperson for House Speaker
Nancy Pelosi (D-Calif.), said, "We're hoping to get some savings,
obviously, from the price negotiation, and then we can try to use some
of that to start to close the doughnut hole." Daly added, "I don't think
we're going to have enough to close it entirely."
According to the Post, closing the doughnut hole
would "require big tax increases or spending cuts elsewhere if Democrats
are to keep" a campaign promise "to be fiscally responsible and avoid
increasing the federal budget deficit."
Sen. Chuck Grassley (R-Iowa) said, "I think the
Democrats are going to shy away from it because it's very costly" (Lee,
Washington Post,
1/7).
Mental Health Legislation
In other congressional news, lobbyists and
supporters maintain that bills to expand access to mental health
services might "stand a better chance of passing" in the 110th Congress,
USA Today
reports.
Supporters seek to pass mental health parity
legislation, which would require health insurers to provide the same
level of coverage for treatment of mental illnesses as they offer for
physical illnesses.
Sen. Pete Domenici (R-N.M.), who has introduced
three previous mental health parity bills, said, "Now our prospects are
the best that they've ever been."
According to USA Today, other mental health bills
"on the radar" include legislation that would provide funds to help
Hurricane Katrina survivors with mental illnesses and help states
establish programs to allow children with serious mental illnesses to
live with their families during treatment.
In addition, legislation to reauthorize the SCHIP
program could include improved mental health coverage for children,
according to Andrew Sperling of the
National Alliance
on Mental Illness (Elias, USA Today, 1/8).
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