When Congress passed the prescription drug bill in 2003, one provision evoked immediate outcry – it barred the federal government from negotiating with pharmaceutical manufacturers over the prices that may be charged to the private plan sponsors that administer the Medicare benefit.  The drug benefit, called Medicare Part D, lowers the cost of prescription drugs for seniors who participate in the plan.  The 43 million beneficiaries pay one-quarter of the cost of the premium with the remainder paid by taxpayers.
The newly elected Democratic Congress made lifting the ban on negotiations one of its first priorities in the 110th Congress.  In January the House moved quickly, passing, 255-170, legislation not only to lift the ban on negotiation, but to require the Secretary of the Department of Health and Human Services to bargain with pharmaceutical companies.  This week the Senate failed to adopt a weaker bill that would simply lift the ban on negotiating.  The procedural vote, needing 60 to pass, failed 55-42. Six Republicans – Coleman (MN), Collins (ME), Hagel (NE), Smith (OR), Snowe (ME) and Specter (PA) – joined Democrats in support of the bill.  Majority Leader Reid (NV) switched his vote to oppose which, under arcane Senate rules, would allow him to bring the bill back to the floor at a later time.

The insurance and pharmaceutical industries lobbied heavily to defeat the bill.  They and their Republican allies argue that the program is working well, drugs prices are being contained, and lifting the ban on negotiating drug prices would do little to save money.  Democrats use the Department of Veterans Affairs as an example of an agency that has used its negotiating power to get cheaper prices than Medicare programs for some drugs.

A newly released analysis by Families USA compares the lowest available Part D prices in April 2006 and 2007 for 15 of the drugs most frequently prescribed to seniors.  The lowest price for every one of the 15 drugs increased, and the median increase was 9.2 percent, almost three times the most recent cost of living adjustment for Social Security.  Higher drug prices mean that Part D beneficiaries meet their deductible sooner, and the cost to taxpayers who pay most of the bills increases.

Options for proponents of lifting the ban include modifying the current Senate bill limiting negotiation authority to only a few types of drugs, or they could attach the provision to another health care bill as it moves through Congress.

Subscribe: