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House Passes Medicare Drug Bill
Measure Would Require Government to Seek Lower Prices

By Christopher Lee
Washington Post Staff Writer
Saturday, January 13, 2007

The House voted yesterday to require the government to negotiate lower prescription drug prices for Medicare beneficiaries. But the measure faces an uncertain future in the Senate, a veto threat from President Bush, and considerable doubts from experts about whether it would save elderly and disabled Americans much money.

The vote was 255 to 170, with 24 Republicans joining 231 Democrats in approving the legislation.

The bill overturns a provision of the 2003 law pushed through by a Republican-controlled Congress that left drug-price negotiations under the new Medicare drug benefit to the private insurers that offer government-subsidized drug plans for seniors in each state.

Backers of the current system, mainly Republicans, say it pits insurers against one another in a healthy competition to negotiate the lowest prices from drugmakers and offer seniors the most attractive monthly premiums, choice of drugs and access to pharmacies.

But critics, mainly Democrats, say the system is a boon to drug companies because it prohibits the government -- perhaps the one force powerful enough to take on the pharmaceutical industry -- from using its bargaining muscle on behalf of seniors.

"This legislation is a common-sense effort to do right by the 43 million Americans enrolled in Medicare," said House Majority Leader Steny H. Hoyer (D-Md.). "This bill is a very important first step in making prescription drugs more affordable."

The bill would require Health and Human Services Secretary Mike Leavitt to pursue negotiations with drug companies and report to Congress in six months.

Medicare "pays more than the VA pays for the same prescription pharmaceuticals," said House Energy and Commerce Committee Chairman John D. Dingell (D-Mich.), the lead sponsor of the bill, referring to the Department of Veterans Affairs.

"The reason is no one is able to negotiate on behalf of the citizens," he added. "You've got a bunch of coldhearted prescription pharmaceutical people . . . who are fixing the prices that are paid by seniors citizens. . . . It's time that we correct this."

Leavitt and other Republicans countered that the year-old program is working, with the Centers for Medicare and Medicaid Services (CMS) reporting overall costs coming in billions of dollars lower than expected and average plan premiums being lower this year than in 2006. Moreover, polls conducted last fall by the Henry J. Kaiser Family Foundation and other nonpartisan groups found that the overwhelming majority of seniors were satisfied with their drug plans.

"Many of us believe that competition and using free-market principles in the long run produce better results, lower costs, higher quality and more satisfaction among seniors. And that's exactly what we've seen with this plan," said House Minority Leader John A. Boehner (R-Ohio).

Republicans also pointed to separate analyses this week from the CMS and the Congressional Budget Office that concluded that the House bill would have little or no effect on spending.

"It's flat wrong to think the government is going to negotiate a lower price than the competitive marketplace," said Rep. Joe L. Barton (Tex.), ranking Republican on the Energy and Commerce Committee.

W.J. "Billy" Tauzin, president of the Pharmaceutical Research and Manufacturers of America, said the House bill may lead to the government limiting which medicines will be covered. "That should not be acceptable to anyone," the former GOP congressman said.

The White House issued a statement this week saying that Bush would veto the bill if it reached his desk. "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.

Medicare provides health-care coverage to most elderly Americans, as well as to about 7 million younger people with disabilities.

Although the measure moved quickly through the House, its prospects are murkier in the Senate, where no companion bill has been introduced. Sens. Ron Wyden (D-Ore.) and Olympia J. Snowe (R-Maine) introduced legislation this week that calls for government price negotiations in certain instances, such as for drugs with no competing substitutes or when the research behind a drug was funded mostly by taxpayers.

"We do think that there is an opportunity to get some additional value for seniors and additional value for taxpayers," Wyden said.

There is considerable pressure on lawmakers to do something. A poll last month by Kaiser and the Harvard School of Public Health found that 85 percent of adults surveyed -- including majorities of Republicans, Democrats and independents -- favor allowing the government to negotiate prescription drug prices for the Medicare program.

Senate Finance Committee Chairman Max Baucus (D-Mont.), whose committee would vet any Medicare drug bill, said in a statement this week that he favors eliminating the ban on government price negotiations -- a stance that increases the chances that some kind of legislation will pass.

But he added that he opposes "heavy-handed" intervention such as price controls. He said that wants to explore options such as expanding government studies on drug effectiveness and increasing the scrutiny on whether insurers are passing on the discounts they get from drug companies to consumers.

"The HHS secretary has a gold mine of data, the ability to get more data, dozens of agencies and tens of thousands of public servants at his disposal," he said. "That is quite a tool box with which to seek fair drug prices for seniors. It is time to open that tool box for Medicare."

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