Medicare Conferees Near Agreement on Generic Drug Provision
Negotiators attempting to reconcile the House and Senate Medicare bills (HR 1 and S 1) are "nearing agreement" on including a provision that would speed generic prescription drugs to market, the Wall Street Journal reports. The House and Senate each included a provision regarding generic drugs in their bills; the tentative agreement reportedly adopts the Senate provision (Lueck, Wall Street Journal, 10/29). That provision would eliminate some patent extension practices used by brand-name drug manufacturers and would amend the 1984 Hatch-Waxman Act, under which the first generic drug to come to market has 180 days of exclusivity, a provision that has led some brand-name companies to pay generic drug makers to not bring their product to market. The provision in the Medicare bill would eliminate the 180 days of exclusivity for any generic drug company that enters such anticompetitive deals or fails to come to market in a timely manner. The measure would also allow generic drug makers to file counterclaims against patent infringement lawsuits by brand-name companies (California Healthline, 6/20). The Justice Department originally said that the provision is unconstitutional but later wrote in a letter to Sen. Judd Gregg (R-N.H.) that changes to the provision's language addressed its concerns. A spokesperson for the Pharmaceutical Research and Manufacturers of America, which has lobbied against the provision, said the group will "evaluate the language [of the provision] as it becomes available" (Wall Street Journal, 10/29).
The Bush administration on Tuesday continued to push negotiators toward a compromise. At a news conference Tuesday, President Bush said, "The best way to provide our seniors with modern medicine, including prescription drug coverage and better preventive care, is to give them more choices under Medicare." Bush has scheduled an event at the White House Wednesday to further voice his support for a Medicare drug benefit. In negotiations on Tuesday, conferees neared agreements on eliminating copayments for home health care visits and avoiding cutting $12 billion in Medicare payments to hospitals (Sherman, AP/Dallas Morning News, 10/29). In recent days, negotiators also have discussed increasing payments to hospitals in exchange for quality of care data, as well as the possibility of placing restrictions on physician-owned specialty hospitals (Wall Street Journal, 10/29). Conferees worked toward a compromise on changing the way Medicare pays for medications it currently covers, a move that could save as much as $10 billion over a decade, according to the AP/Morning News (AP/Dallas Morning News, 10/29). Currently, Medicare reimburses doctors who administer medications to beneficiaries in their offices for 95% of the average wholesale price of the drugs in most cases. Negotiators are considering requiring Medicare to reimburse providers 85% of AWP for one year, while Medicare officials research and determine a new market-oriented price system. The new system would allow some discretion for individual drugs to be paid based on AWP if necessary (California Healthline, 10/24). Sen. Charles Grassley (R-Iowa) said negotiators plan to begin voting on the issues Wednesday.
Despite continued progress, some officials and lawmakers are growing increasingly concerned that the emerging compromise legislation will exceed the $400 billion over 10 years allotted for it, the AP/Morning News reports. Grassley said, "Sure, it's a concern that the first draft might be bigger. But in the end it can't be bigger" (AP/Dallas Morning News, 10/29). Negotiators are considering a number of cost-control mechanisms, including a trigger that would be activated when Medicare spending reached a certain level. On Monday, Bush administration officials also proposed limiting the amount of money from the general fund that could be spent on physician services and the new drug benefit in the future. Under the proposal, Medicare trustees would monitor the program's finances, and the president would submit a proposal to Congress on how to respond to solvency problems. Such an idea caused "consternation among some Democrats," the Journal reports (Wall Street Journal, 10/29). The Leadership Council of Aging Organizations, which includes the AFL-CIO and the National Senior Citizens Law Center, has also expressed concerns about cost, saying that a proposal that would require Congress to intervene if Medicare spending exceeds a certain limit would "bring fear and uncertainty to millions of Americans," according to CongressDaily/AM. In a letter to conferees, the LCAO said, "It is a longstanding principle of the LCAO that Medicare reform must assure Medicare payments will keep pace with the growth in benefit costs without using artificial budget inflators or caps on spending" (Rovner, CongressDaily/AM, 10/29).
Although a final compromise has yet to be reached, some of the tentative decisions that have been made so far are generating "complaints," according to CongressDaily. In a memo to conferees, Sen. Jeff Bingaman (D-N.M.) said that the proposed Medicare drug benefit would "threaten drug benefits and other coverage for millions of low-income Medicare and Medicaid beneficiaries." The National Center for Policy Analysis also has expressed concern about the proposal. Further, Democrats on the Joint Economic Committee also have said that linking premiums under Medicare Part B, which covers outpatient services, to beneficiaries' incomes would "discourag[e] their participation" in Medicare and "creat[e] double trouble for Medicare by undermining both its social insurance design and the risk pool," CongressDaily reports (Rovner, CongressDaily, 10/28). House Republicans have also expressed concern about an apparent lack of communication between conferees and other lawmakers, the Washington Times reports. "Members are very concerned that they're going to have an 800-page bill shoved down their throats at the last minute," one House Republican aide said. Because a conference report cannot be changed once it emerges, House conservatives are just "hop[ing] their concerns are addressed," the Times reports. Rep. John Kline (R-Minn.) is circulating a letter among House Republicans, asking leaders to allow them at least three days to view the conference report before a vote is taken (Fagan, Washington Times, 10/29). The AP/Morning News reports that about three dozen anti-tax and conservative groups have written House Majority Leader Tom DeLay (R-Texas), saying that Congress should "scrap the drug proposal because it is certain to cost far more than $400 billion" over 10 years (AP/Dallas Morning News, 10/29).
Major issues yet to be resolved by conferees include cost-containment measures; the House-passed competition provision; the issue of allowing U.S. residents to purchase medications from Canada and other nations; and the creation of tax-preferred health savings accounts, CongressDaily/AM reports. Some Democrats and Republicans said they are growing "more concerned about their ability" to craft a compromise, according to CongressDaily/AM. "We have been inundated with reports that the only thing coming out of the conference so far will be higher premiums and higher cost to seniors virtually across the board. Under those circumstances, it's going to become increasingly difficult to anticipate a scenario that allows us to successfully complete our work on this bill," Senate Minority Leader Tom Daschle (D-S.D.) said. Sen. Orrin Hatch (R-Utah) said he is hopeful that conferees will be able to reach a deal, but he added that there is "real skepticism as to whether we can bring the House and Senate together" (CongressDaily/AM, 10/29). Sen. John Breaux (D-La.) said he doubted talks could be completed before next week. Sen. Max Baucus (D-Mont.) expressed optimism for the legislation but warned that the House-passed competition provision "has got to be off the table or there's not going to be a bill" (Rovner/Heil, CongressDaily, 10/28).
The Alliance for Retired Americans, which represents three million retirees, this week began running an advertisement on CNN, urging people to ask lawmakers to reject the proposed Medicare prescription drug benefit and "approve one that really would help senior citizens," the AP/Dallas Morning News reports. In the ad, an announcer asks elderly shoppers in a mall, "Did you know that under the Medicare drug plan they're pushing through Congress, four million retirees could lose the coverage they now receive?" Edward Coyle, the ARA's executive director, said the ad is the "first commercial in the group's national campaign to support passage of a meaningful drug program," according to the AP/Morning News. He added that the commercial is intended to help inform older Americans about the progress of the Medicare legislation (Sidoti, AP/Dallas Morning News, 10/28).
HHS Secretary Tommy Thompson is scheduled to answer questions about Medicare today in the online interactive forum "Ask the White House" at 11:40 am ET. A transcript of the chat will be available online after the discussion.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.