House Passes Bill Mandating Drug Price Negotiations

The Associated Press

Friday 12 January 2007

Washington - The House approved legislation Friday requiring the government to negotiate with drug companies to lower the prices of medicines for Medicare patients.

Despite a veto threat from the president, Democrats used their majority status to push through another of House Speaker Nancy Pelosi's priorities for the first 100 hours of the new Congress. The vote was 255-170.

The idea behind the bill is using the sheer size of the Medicare program to generate steeper discounts than private insurance plans can muster.

"Forty-three million people can have the purchasing power to perhaps encourage these drug houses to give the government and the American retirees a better price," said the bill's author, Rep. John Dingell, D-Mich.

However, the bill's prospects dim after Friday's vote. President Bush has said he would veto the bill if it makes it to his desk. He said that competition is already reducing prices for seniors and creating an environment that encourages the development of new drugs.

The Senate has held one hearing on the subject this year, and more are expected, with that chamber likely to take a much longer look at the concept than the House did.

The legislation strikes a clause known as the "noninterference provision," which prohibits the secretary of Health and Human Services from participating in negotiations between drug manufacturers and insurers that sponsor Medicare plans. It would require the secretary to negotiate. Insurers still would be allowed to try for steeper discounts than what the government obtained.

Republicans countered that the drug benefit, which kicked in on Jan. 1, 2006, has cost less than anticipated, and the large majority of seniors and disabled people who use the program are satisfied.

"With all that's right with the program, it seems unwise and unkind to jeopardize its success," said Rep. Michael Burgess, R-Texas.

Democrats have said that savings produced by the negotiations would be used to reduce a coverage gap that is common in many plans. Reducing the gap, known as the doughnut hole, would lower those beneficiaries' out-of-pocket costs.

But Republicans counter that there wouldn't be any savings. Also, the nonpartisan Congressional Budget Office said the legislation was unlikely to result in savings to taxpayers.

The drug program cost about $30 billion in its first year. Insurance companies offer competing coverage plans, and seniors may enroll in the one they like best. The administration announced on Wednesday that 23.5 million seniors had enrolled in stand-alone plans as of Jan. 1.

White House press secretary Tony Snow noted that actuaries at both the budget office and the Department of Health and Human Services say the bill will have little or no effect on federal spending and provide no substantial savings to the government.

"If this bill is presented to the president, he will veto it," Snow said Friday.

Currently, private drug plans negotiate how much they'll pay for the medicine their Medicare customers take. Those plans get a federal subsidy, plus consumers pay for a portion of the medicine.

Dingell said the government can do better than individual insurance companies in getting discounts.

"The president and his Republicans allies have argued that this bill would do nothing. Then why, I must ask, would he bother to veto it?" said Dingell, chairman of the House Energy and Commerce Committee.



Go to Original

Bush Renews Vow to Veto Medicare Bill
By Kevin Freking
The Associated Press

Friday 12 Janurary 2006

Washington - President Bush renewed his veto threat Friday as Democrats pushed legislation that would require the government to negotiate drug prices for Medicare patients.

The House began debating the bill that would require the secretary of Health and Human Services to conduct those negotiations. It's one of Speaker Nancy Pelosi's six priorities for the new Democratic-controlled House.

Democrats touted the negotiations as a way to save money for seniors and taxpayers. They said that the government would be able to drive down prices by buying in bulk.

"Medicare overpays drug companies in purchasing medicine," said the bill's author, Rep. John Dingell, D-Mich.

Republicans countered that the drug benefit, which kicked in on Jan. 1, 2006, has cost less than anticipated, and the large majority of seniors and disabled who use the program are satisfied.

"With all that's right with the program, it seems unwise and unkind to jeopardize its success," said Rep. Michael Burgess, R-Texas.

Bush contends that competition is already reducing prices for seniors and creating an environment that encourages the development of new drugs.

"Government interference impedes competition, limits access to lifesaving drugs, reduces convenience for beneficiaries and ultimately increases costs to taxpayers, beneficiaries and all American citizens alike," the administration said in a written statement Thursday.

White House press secretary Tony Snow on Friday said actuaries at both the Congressional Budget Office and the Department of Health and Human Services say the bill will have little or no effect on federal spending and provide no substantial savings to the government.

"If this bill is presented to the president, he will veto it," Snow said.

Presidents have vetoed 1,485 bills during the nation's history. Congress overrode only 106 of them, according to the Congressional Research Service.

Such overrides require that two-thirds of those present in each chamber vote to override the president's veto.

Currently, private drug plans negotiate how much they'll pay for the medicine their customers take. Those plans get a federal subsidy, plus consumers pay for a portion of the medicine.

Dingell said the government can do better than individual insurance companies in getting discounts.

"The president and his Republicans allies have argued that this bill would do nothing. Then why, I must ask, would he bother to veto it?" said Dingell, chairman of the House Energy and Commerce Committee.

Democrats have said that savings produced by the negotiations would be used to reduce a coverage gap that is common in many plans. Reducing the gap, known as the doughnut hole, would lower those beneficiaries' out-of-pocket costs.

But Republicans counter that there wouldn't be any savings. Also, the nonpartisan Congressional Budget Office said the legislation was unlikely to result in savings to taxpayers.

The program cost about $30 billion in its first year. Insurance companies offer competing coverage plans, and seniors may enroll in the one they like best. The administration announced on Wednesday that 23.5 million seniors had enrolled in stand-alone plans as of Jan. 1.

While a majority of seniors are expressing satisfaction with the program, surveys also indicate that they overwhelmingly want the government to have the power to negotiate drug prices.

A survey of seniors for the Kaiser Family Foundation showed that about 81 percent of seniors want to let the government use its buying power to negotiate drug prices, including 67 percent who said they strongly favor such negotiations.

The issue is expected to have a tougher time in the Senate. However, Sen. Max Baucus, D-Mont., gave supporters of the measure a lift on Thursday when he said the total prohibition on government negotiations for Medicare beneficiaries should be eliminated.

"I do not buy the argument that the sky will fall on the prescription drug market if we remove this clause," said Baucus, chairman of the Senate Finance Committee, which has jurisdiction over Medicare.

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