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Report Urges Bargaining Power for Medicare

Popular Drugs Potentially 58% Cheaper, Group Says

WebMD Health News

Sept. 27, 2005 -- A new report shows that there is a way American taxpayers could save nearly 60% on prescription drug costs for Medicare.

It works by giving Medicare the same authority used by the Veterans Administration to negotiate prices with pharmaceutical manufacturers, concludes the report issued Tuesday.

The analysis shows that popular drugs purchased by the VA health system cost the government on average 58% less than prices paid by seniors under Medicare's prescription drug discount card program in effect for more than a year.

Price differences in some cases are several times lower under the VA system, translating in some cases to hundreds of dollars of yearly price differences. For example, an annual supply of Zocor, a cholesterol-lowering drug, costs $794 per year under the deepest discounts offered by the card program, compared with $168 paid by the VA, according to the report, published by the consumer health group Families USA.

The government has not yet disclosed price lists and formularies for hundreds of different plans that will be available under Medicare's "Part D" prescription drug benefit due to begin Jan. 1, 2006. But the group says that the discount card program, used by the Bush administration as a way for insurers and benefit management companies to model Part D, is a close indicator of what prices will look like.

The Medicare law passed in 2003 forbids the federal government from negotiating drug prices with manufacturers, a provision critics said would provide windfall profits for the industry.

"The continued prohibition against such bargaining will not only hurt seniors but will fleece the American taxpayer," says Ron Pollack, executive director of Families USA.

Support Grows in Congress

The group used the report to rally support for moves to repeal the negotiating ban. Sen. Ron Wyden (D-Ore.), who sponsored a repeal in March that narrowly failed by a 51-49 vote, said Tuesday that several lawmakers had changed their minds and that backers now have the votes to pass it. Wyden vowed to soon push the measure again as Congress struggles to find money to pay for hundreds of billions of dollars of costs left by Gulf Coast hurricanes.

"I'm telling you, the votes are there in the Unites States Senate," Wyden said. "This is not a question of whether it is going to happen, but when it's going to happen."

"The American taxpayer needs the best deal possible," said Sen. Debbie Stabenow (D-Mich.).

Several Republicans supported the measure in March. But Congressional Republican leaders and President Bush remain opposed to the changes.

Assistant Senate Republican Leader Mitch McConnell (Ky.) said "it's too early to say" how many votes Medicare negotiating power would get.

Medicare spokesman Gary Karr dismissed the report, saying that price reductions under Part D would likely be deeper than those seen under the discount card program. "It seems to me they're comparing trees to water," he said.

Karr pointed to a 2004 statement from the Congressional Budget Office stating that allowing federal price negotiations would have a "negligible" impact on federal spending.

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