Bush Pledges Veto of Drug Price Negotiations Bill
President Bush on Thursday indicated he would veto a bill (HR 4) that would require the HHS secretary to negotiate directly with pharmaceutical companies on prices for medications under the Medicare prescription drug benefit, the New York Times reports (Pear, New York Times, 1/12).
The White House in a written statement said that the bill, which the House is scheduled to consider on Friday, would create "[g]overnment interference [that] impedes competition, limits access to lifesaving drugs, reduces convenience for beneficiaries and ultimately increases costs to taxpayers, beneficiaries and all American citizens alike" (Espo, AP/Atlanta Journal-Constitution, 1/12).
The White House statement said that competition among private insurers under the Medicare drug benefit "is reducing prices to seniors, providing a wide range of choices and leading to a more productive environment for the development of drugs" (Gibson/LaMendola, South Florida Sun-Sentinel, 1/12).
White House spokesperson Tony Fratto said that the House proposal "looks good on a bumper sticker, but it's not practical. The evidence is in that the market is working to lower drug costs" (Lopes, Washington Times, 1/12).
According to the New York Times, the White House veto threat is "an effort to hold down the number of [House] votes and to prevent the measure from gaining any more momentum" (New York Times, 1/12).
House Energy and Commerce Committee Chair John Dingell (D-Mich.) said, "The president and his Republican allies have argued that this bill would do nothing. Then why, I must ask, would he bother to veto it?"
House Ways and Means Committee Chair Charles Rangel (D-N.Y.) urged Bush to withhold the veto threat and work with Congress to improve the Medicare drug benefit (AP/Atlanta Journal-Constitution, 1/12).
Following a Senate Finance Committee hearing on the issue, committee Chair Max Baucus (D-Mont.) said "the total prohibition on negotiation should be eliminated" (New York Times, 1/12).
However, he "indicated that he would not endorse the House Democrats' bill," CQ Today reports (Armstrong, CQ Today, 1/11). At the hearing, three out of four academic witnesses "agreed that limited and targeted government intervention could be helpful in driving down the prices of some crucial drugs," but all four witnesses cautioned that "price controls or attempts to drive down prices by broad negotiations could be ineffective or counterproductive," according to CongressDaily (Lee/Hess, CongressDaily, 1/11).
Baucus said the "'non-interference clause' in the original Medicare Modernization Act is prohibiting us from pursuing constructive efforts to make the benefit work better for seniors" (CQ Today, 1/11).
Baucus and other Senate Democrats said HHS should negotiate prices in select areas where competition has not resulted in lower prices (New York Times, 1/12). Baucus also supports the creation of a program to provide beneficiaries with "consumer-oriented" information about the effectiveness of competing drugs, with the aim to increase use of the most cost-effective choices, the Los Angeles Times reports.
Baucus said that "there are areas of the drug benefit in which market competition is not working," but added, "I see nothing that warrants heavy-handed intervention in this market" (Alonso-Zaldivar, Los Angeles Times, 1/12).
Senate Finance Committee ranking member Chuck Grassley (R-Iowa), who is leading Senate opposition of mandatory price negotiations, "sounded more open to Baucus' proposal" of eliminating the existing ban on price negotiations than to the House bill, CQ Today reports.
Grassley said, "If we can come up with something that doesn't harm the great success of the competitiveness of the 2003 bill, I'm willing to look at it" (CQ Today, 1/11).
Sens. Olympia Snowe (R-Maine) and Ron Wyden (D-Ore.) on Wednesday introduced a potential compromise bill that would repeal the ban on price negotiations. The bill would require HHS to help negotiate contracts for drugs that were developed with substantial funding from the federal government, and it also would require negotiations when a brand-name drug is available from only one manufacturer and no "therapeutic equivalent" or substitute is on the market (New York Times, 1/12).
Wyden said, "The key for Congress is to zero in so that negotiations are in critical areas where bargaining power can really be of benefit to seniors and to taxpayers." Snowe said that negotiations do not "have to be an all-or-nothing proposition."
The Congressional Budget Office has indicated that the Snowe/Wyden bill could save the government money, while it did not come to the same conclusion on the House proposal (Los Angeles Times, 1/12).
Grassley said that Democratic proposals on requiring price negotiations are "a stalking horse for price controls," adding, "We have enough votes to sustain a veto" (New York Times, 1/12). Grassley also said, "Federal price negotiations would unravel the whole structure of the Medicare drug benefit, which relies on competing private plans" (Washington Times, 1/12).
Richard Frank, a professor of health care economics at Harvard University, said that cost controls on drugs might pose "particular risks to precisely the research and development that should be most encouraged."
Meanwhile, the Congressional Research Service said that pharmaceutical companies might respond to lower Medicare prices by increasing prices for other drug buyers. "While drug prices paid by Medicare beneficiaries may fall, overall drug prices may increase for other consumers, specifically for the under-65 population," CRS said (New York Times, 1/12).
In related news, the Washington Post on Friday examined how the pharmaceutical lobby "continues to wield tremendous power in the Democratic-controlled Congress." According to the Post, Democratic House leaders last week "briefly considered" proposing a government-run prescription drug program, but then "stepped back largely out of concern that the pharmaceutical industry would stall a complex change."
Aides said that Democratic leaders were concerned that this proposal would "deny them a quick victory on a top consumer-oriented priority," the Post reports.
Drug firms, which have given more campaign contributions to Republicans in recent years, are now "transforming their Washington operations by hiring top Democratic lobbyists to gain access to new committee chairmen, bolstering Democratic political donations and spending millions on public relations campaigns to overcome an image, indicated in recent surveys, that the industry puts profits ahead of patients," the Post reports (Smith/Birnbaum, Washington Post, 1/12).
APM's "Marketplace Morning Report" on Friday included a discussion on drug price negotiations under Medicare with "Marketplace" reporter Helen Palmer (Jagow, "Marketplace Morning Report," APM, 1/12). Audio of the segment is available online.This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.