The Democrats suffered a major blow in Congress when the Senate blocked a bill in April that would have allowed Medicare to participate in negotiations for drug prices in the Medicare Part D Prescription Drug Program. Such negotiations are not allowed under current law.
Republicans argued the issue is a debate between using freemarket forces or the government to set drug prices for Part D. Democrats argued they just want the government to have more access into the negotiation process.
Although the bill would have dropped the “noninterference provision” to allow Medicare to take part in negotiations, it would not have allowed Medicare to create a particular formulary or price structure, according to a Congressional Budget Office report that estimated the bill’s cost.
“Without the authority to establish a formulary or other tools to reduce drug prices, we believe that the Secretary would not obtain significant discounts from drug manufacturers across a broad range of drugs,” the CBO wrote.
Health & Human Services Secretary Mike Leavitt echoed the CBO statement and seems content to keep the current system. “If government interferes in the market, it will have to withhold access to some drugs to force them to lower their prices,” Leavitt wrote April 18 in an editorial. “There is no way a government official can do a better job picking drugs and setting prices than the millions of consumers making choices in a free market.”
The CBO broke down the bill’s additional provisions the following way.
- The bill would modify the rules governing access of congressional support agencies to data on prescription drug programs and Medicare Advantage plans.
- It would have authorized the disclosure of claims for Part D to state Medicaid agencies.
- It would have required the Secretary to make data available to the public on the prices that enrollees in each plan are charged for covered Part D drugs.
- It would have required the Secretary to establish an advisory committee to assist with the development of a prioritized list of potential studies of the comparative clinical effectiveness of drugs covered under Part D.
- It would have required sponsors of prescription drug plans to consider relevant studies of comparative clinical effectiveness when developing their Part D formularies.
- It would have required the CBO, the Government Accountability Office, and the Medicare Payment Advisory Commission to prepare reports on Part D.
“Senator Ron Wyden, Democrat of Oregon, said he did not want the government to supplant private plans,” the New York Times wrote April 19. “But, Mr. Wyden said, Medicare could negotiate better bargains on selected drugs that have no therapeutic equivalents or competition.”
However, the bill’s failure in the Senate doesn’t mean the issue will die. The NY Times wrote, “Mr. Wyden predicted that the Senate would vote again on the issue, perhaps as an amendment to a spending bill or [an]other measure. ‘The fight will go on,’ he said.”
