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Democrats To Require HHS To Negotiate Medicare Prescription Drug Prices

Armen Hareyan's picture

House Democrats on Friday plan to introduce a bill that would require the HHS secretary to negotiate directly with pharmaceutical companies on prices for medications under the Medicare prescription drug benefit, CQ HealthBeat reports. A draft version of the legislation circulated this week stated that "notwithstanding any other provision of law, the secretary shall negotiate with pharmaceutical manufacturers the prices that may be charged for covered Medicare Part D drugs for Part D eligible individuals who are enrolled under a prescription drug plan or under" a Medicare Advantage plan. The bill would not authorize the HHS secretary to "establish or require" a formulary for the Medicare prescription drug benefit, although private health insurers that sponsor prescription drug plans could continue to use formularies.

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According to Democratic aides, the legislation would allow private health insurers that sponsor Medicare prescription drug plans to offer lower prices on medications than the HHS secretary obtains through negotiations with pharmaceutical companies. The House likely will address the bill on Jan. 12.

A Democratic aide said, "We're not taking away the ability of PDPs to obtain better prices than those negotiated by the secretary." Revisions to the draft version of the bill are "unlikely," according to a Democratic aide. Some analysts maintain that HHS Secretary Mike Leavitt will have limited ability to obtain lower prices on medications through negotiations with pharmaceutical companies without the authority to establish a formulary for the Medicare prescription drug benefit, according to CQ HealthBeat. Consultant Alec Vachon, a former Republican staffer on the Senate Finance Committee, said, "The bill gives Leavitt no new powers to negotiate drug prices." Vachon added, "It's straight out of 'Oliver Twist.' All Mike Leavitt can do is go to drug manufacturers and say, 'Please, Sir, may I have some more discounts?' If Pfizer says 'no,' what does he do then?" Most analysts predict that President Bush will veto the bill, according to CQ HealthBeat. However, Bill Vaughan, a lobbyist for Consumers Union and a former Democratic staffer on the House Ways and Means Committee, said that Bush might sign the legislation. "We are going to need massive savings in Medicare," Vaughan said, adding, "The 75-year unfunded liability for the drug benefit is $10.4 trillion" (Reichard, CQ HealthBeat, 1/4).

Pharmacists and patient advocates have reported fewer problems with the Medicare prescription drug benefit in early 2007 than they did in early 2006, when the program began, USA Today reports (Appleby, USA Today, 1/5). Medicare beneficiaries had until Dec. 31, 2006, to enroll in or switch prescription drug plans, and coverage for the 2007 plan year began on Jan. 1 (Kaiser Daily Health Policy Report, 1/2). USA Today reports that last year Medicare beneficiaries experienced problems with access to medications because of computer glitches, long waits at pharmacies and other issues. Deane Beebe of the Medicare Rights Center attributed the decrease in reports of problems with the Medicare prescription drug benefit in part to new rules that require health insurers to provide beneficiaries with a 30-day supply of medications previously covered, regardless of whether the treatments are covered for 2007 (USA Today, 1/5).