House Passes Bill To Require Drug Benefit Negotiations

The House on Friday voted 255-170 to approve a bill (HR 4) that would require the HHS secretary to negotiate prices directly with pharmaceutical companies under the Medicare prescription drug benefit and report to Congress in six months, the Washington Post reports (Lee, Washington Post, 1/13).

All House Democrats and 24 House Republicans voted in favor of the bill, which Democrats had pledged to pass in the first 100 hours of the 110th Congress. The bill states that the HHS secretary "shall negotiate with pharmaceutical manufacturers the prices that may be charged" to private Medicare prescription drug plans.

The bill would allow insurers that sponsor Medicare drug plans to negotiate lower prices than those obtained by the government. The 2003 Medicare law prohibits the government from negotiating with pharmaceutical companies under the drug benefit (Pear, New York Times, 1/13).

House Republicans introduced one motion that would have prohibited restrictions on access to medications and forbidden price negotiations to result in an increase in prescription drug prices under Medicare or the Department of Veterans Affairs' drug program. That motion failed 196-229 (Armstrong, CQ Today, 1/12).

Supporters of the House bill project that it would save $96 billion over 10 years.

However, the Congressional Budget Office last week released a report stating that the bill "would have a negligible effect on federal spending because we anticipate that the secretary would be unable to negotiate prices across the broad range of covered Part D drugs that are more favorable than those obtained by the prescription drug plans" (Krasner, Boston Globe, 1/13).

The bill "is unlikely to become law in its current form," the New York Times reports (New York Times, 1/13).

White House Press Secretary Tony Snow said on Friday, "If this bill is presented to the president, he will veto it" (Pugh, McClatchy/Miami Herald, 1/13).

Prospects for the bill in the Senate are "murkier" than in the House, according to the Post, which notes that "no companion bill has been introduced" (Washington Post, 1/13). A potential compromise bill introduced last week by Sens. Olympia Snowe (R-Maine) and Ron Wyden (D-Ore.) would require HHS to help negotiate prices 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 (California Healthline, 1/12).

Senate Finance Committee Chair Max Baucus (D-Mont.) on Friday said he would consider supporting negotiations legislation in the Senate if it were to "include some kind of instruction" to the HHS secretary on how to negotiate (Johnson, CongressDaily, 1/12).

In related news, some House Democrats are pushing to reduce government subsidies paid to Medicare Advantage plans under the prescription drug benefit, the Wall Street Journal reports. Some Democrats maintain that lowering payments to MA plans could help offset increases in spending on other health programs, such as SCHIP or reimbursements to physicians under Medicare, the Journal reports.

Rep. Pete Stark (D-Calif.) said, "There are precious few areas where we can save money. Medicare Advantage is a prime target to pick up a few dollars."

According to the Journal, health insurers "are preparing their ... counterattack" to the potential proposal.

America's Health Insurance Plans said that increasing enrollment in MA plans demonstrates beneficiaries' satisfaction with the program (Lueck, Wall Street Journal, 1/13).

NPR's "All Things Considered" on Friday reported on the House price negotiations bill. The segment includes comments from Barton; Stark; and Reps. Michael Burgess (R-Texas), Jeb Hensarling (R-Texas) and Walter Jones (R-N.C.) (Rovner, "All Things Considered," NPR, 1/12).

Audio of the segment is available online.