Medicare HMO Payments, Prescription Drugs Expected Legislative Focus

The "most immediate effect" of the Democrats' takeover of the House might be a cut in payments to Medicare HMO plans, the Boston Globe reports.

Rep. Pete Stark (D-Calif.), who is expected to become chair of the House Ways and Means Health Subcommittee, has said he wants to roll back the portion of the 2003 Medicare law that boosts payments to Medicare HMOs offered by private insurance companies (Rowland, Boston Globe, 11/9).

House Minority Leader Nancy Pelosi (D-Calif.), who is expected to become House speaker, has said that within the first 100 hours after the House convenes, she will seek to pass legislation to allow Medicare to negotiate directly with pharmaceutical companies for discounts on prescription drugs.

Democrats also are "likely to propose changes to Medicare price formulations for expensive injectable cancer drugs" and might "revive debate over the issue of importing cheaper prescription medicines from Canada and other countries," the Newark Star-Ledger reports (Todd, Newark Star-Ledger, 11/10).

According to CongressDaily, legislation by Rep. Henry Waxman (D-Calif.) that "sets up a process for the FDA to approve generic versions of so-called biologic drugs now stands a stronger chance of seeing House action." Waxman also might "spotlight issues such as drug safety and off-label marketing," according to CongressDaily (Vaughan, CongressDaily, 11/10).

Charles Baker, CEO of Harvard Pilgrim Health Care, said that Medicare HMO payments approved in 2003 have bipartisan support. Baker said, "I wouldn't assume right out of the gate there is going to be a dramatic change in status" (Boston Globe, 11/9).

Catherine Bennett, a partner for Venable and a pharmaceutical industry lobbyist, said that allowing the federal government to directly negotiate Medicare drug prices "would just be chilling." Bennett said, "If the federal government is suddenly setting the cost of your product, you might get short-term savings in the Medicare program, but where do you get the money for the next generation of innovative drugs?" (Vaughan, CongressDaily, 11/10).

Pharmaceutical Research and Manufacturers of America spokesperson Ken Johnson said, "Throughout the history of our country, price controls have led to shortages and fewer choices by consumers. We don't believe conservative or moderate Democrats want that to happen."

Johnson added, "We're going to be in a challenging environment, but we're convinced our arguments will resonate with many common-sense Democrats."

James Greenwood, president of the Biotechnology Industry Organization, said drug makers could benefit from Democratic control in such areas as stem cell research.

Ira Loss, senior health care analyst at Washington Analysis, said, "For investors in drug stocks, you better tighten your seat belts. It's going to be a bumpy ride." Loss added that Democratic senators from states with high concentrations of pharmaceutical and biotech companies -- such as New Jersey and Massachusetts -- "are very attuned to the fact of the jobs created by these industries." Loss said, "Any legislation that might imperil the companies might be watered down" (Newark Star-Ledger, 11/10).

In related news, the 109th Congress in its lame-duck session beginning next week might consider legislation to revoke a cut to physician Medicare reimbursements scheduled to go into effect in January 2007, according to an aide to Senate Majority Leader Bill Frist (R-Tenn.), CongressDaily reports (Wodele et al., CongressDaily, 11/10).

One possibility is combining legislation addressing Medicare reimbursements with tax relief legislation that is supported by both parties (Abrams, Washington Examiner, 11/10).

Frist and Senate Minority Leader Harry Reid (D-Nev.) are working to "finish up as many spending measures as possible next week," CongressDaily reports (Wodele et al., CongressDaily, 11/10).

Congress so far has passed only two of 11 appropriations bills -- defense and homeland security -- for fiscal year 2007, which began Oct. 1. Congress still must address all other domestic programs, which have a combined budget of $460 billion.

Republican leaders in the House are "leaning toward" passing a continuing resolution, which would fund federal programs at 2006 budget levels into January 2007, the AP/Examiner reports. The Democrat-led 110th Congress then would have to address those appropriations "at a time when they are ... trying to launch action on their agenda," the AP/Examiner reports (AP/Washington Examiner, 11/10).

President Bush on Thursday said he wants the 109th Congress to finish FY 2007 appropriations instead of passing a long-term continuing resolution. Reid on Thursday in a letter to Frist said Democrats would cooperate with Republicans on appropriations and tax cut legislation (Wodele et al., CongressDaily, 11/10).