Sen. Dayton Proposes Bill To Allow Prescription Drug Price Negotiation in Medicare
Sen. Mark Dayton (D-Minn.) on Monday announced that he will become "one of his party's standard-bearers" in an effort to revise the new Medicare law with legislation to allow CMS to negotiate directly with pharmaceutical companies for discounts on prescription drug prices, a practice banned under the law, the AP/Duluth News Tribune reports (Lohn, AP/Duluth News Tribune, 1/25).
The bill also includes provisions to reduce Medicare premiums; address coverage gaps in the new prescription drug benefit, which is scheduled to begin in 2006; and ensure that beneficiaries are not forced to enroll in Medicare Advantage plans. According to a Dayton staff member, the legislation would reduce premiums for some beneficiaries through the elimination of an estimated $12 billion in subsidies that the Medicare law provides for HMOs and pharmacy benefit managers to administer prescription drug coverage. In addition, the bill over time would eliminate the coverage gap in the Medicare prescription drug benefit for annual medication costs between $2,200 and $3,600.
The legislation would not affect the $250 annual deductible and $35 monthly premiums that Medicare beneficiaries will have to pay for the prescription drug benefit. At a press conference on Monday in St. Paul, Minn., Dayton said, "This is about survival," adding, "People are being ravaged by escalating drug prices that are out of control." Dayton also said that the bill will serve as the "the major reform legislation of the Democratic caucus next year." According to the Minneapolis Star Tribune, Dayton "charged that [President] Bush's prescription drug policies essentially have been written by pharmaceutical companies and other corporate health care interests" (Smith/Diaz, Minneapolis Star Tribune, 1/25).
Dayton said that the Medicare reform legislation could pass in the Senate with support from a few Republicans. He said that he does not have a House co-sponsor or cost estimate for the bill and that the pharmaceutical industry likely will oppose the legislation (AP/Duluth News Tribune, 1/25).
Jeff Trewhitt, a spokesperson for the Pharmaceutical Research and Manufacturers of America, said, "The best way to achieve cost savings with a Medicare drug benefit is by having private health plans negotiate discounts with the pharmaceutical and biotechnology companies" (Minneapolis Star Tribune, 1/25). According to Trewhitt, a Congressional Budget Office study found that a provision to allow CMS to negotiate directly with pharmaceutical companies for discounts on prescription drug prices would have a "negligible effect" on federal Medicare costs (Duluth News Tribune, 1/25).