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HHS Chief Opposes Negotiation of Medicare Drug Prices

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By Kevin Freking
Associated Press
Tuesday, November 14, 2006

The nation's top health official said yesterday that the government should not negotiate Medicare drug prices, a position that sets the stage for an early confrontation with the incoming Democratic Congress.

"The idea of the government negotiating drug prices really isn't about the government negotiating drug prices," Health and Human Services Secretary Mike Leavitt said. "It's a surrogate for a much larger issue, which is really government-run health care."

About 22.5 million seniors and the disabled are enrolled in private insurance plans subsidized by the federal government. The insurers negotiate with pharmaceutical companies over how much they will pay for drugs covered by their plans.

But Democratic lawmakers have promised a new approach when they take control of Congress in January. They would let the federal government use its massive purchasing power to negotiate the price of drugs used by Medicare beneficiaries. They say that such leverage would produce substantial savings that could then be used to improve the overall program.

Leavitt said Democrats should focus their efforts next year on issues where there is broad agreement, such as expanding basic health insurance coverage.

House Minority Leader Nancy Pelosi (D-Calif.), who is likely to be the next speaker of the House, has said she would quickly push for the government to negotiate lower drug prices.

"Requiring the federal government to negotiate on behalf of seniors would generate significant savings, savings which could be used to close the gap in coverage -- or 'doughnut hole' -- that threatens millions of Medicare beneficiaries this year," Pelosi said.

Pelosi spokesman Brendan Daly said, "We want to work with Republicans on health care as well as other issues, but misleading rhetoric about 'government-run health care' does not help. . . . Democrats are proposing common-sense improvements to the complex Bush prescription drug program."

Some Democrats also will urge the government, in addition to negotiating drug prices, to run a drug program that would compete with plans provided by the insurers. Democrats have predicted that seniors would flock to the government-run plan.

Leavitt disagreed. He said the government could not develop a plan that would satisfy the needs of a broad range of consumers.


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