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Senate Backs Part D Price Bargaining

Lawmakers Support Federal Negotiation of Prescription Drugs for the First Time

WebMD Health News

March 16, 2006 -- The Senate on Wednesday approved granting the federal government the power to bargain with pharmaceutical manufacturers for lower prices under the Medicare prescription drug program.

The vote, which came as part of a budget resolution, could signal a significant shift in Medicare policy. Medicare law now expressly forbids the government from negotiating prices, and critics have made reversal of the policy a priority since the plan was enacted in early 2004.

While the vote does not yet alter Part D, it does show that lawmakers will likely pass an identical amendment when it comes up later this year.

Medicare began offering drug benefits to seniors on Jan. 1 and has faced several serious implantation glitches. More than 5 million seniors have voluntarily signed up for the program, while about 20 million more got automatic coverage or were shifted from a plan offered by an employer.

The plan is projected to cost taxpayers more than $730 billion over the next decade.

Critics have strongly criticized the Medicare program because it relies on private insurance companies to offer drug benefits but bars the government from using its huge purchasing power to negotiate for lower prices.

"I think they think this is preposterous. Why the heck can't Medicare negotiate like everyone else?" Sen. Ron Wyden (D-Ore.), a co-sponsor of the measure, told WebMD.

Bush administration officials have maintained that individual insurance companies have succeeded in negotiating lower prices and lowering average monthly premiums. The plan has also lowered overall costs for individual beneficiaries, President Bush said during a Medicare event in Silver Spring, Md., on Wednesday.

"Drug costs have been cut in half. That's positive news if you're a senior," he said.

Growing Support

Still, a growing number of lawmakers have expressed discomfort with drug prices, which can vary widely under the plan.

Forty-nine senators voted for a similar measure last year, while 51 supported it in a vote last November. On Wednesday, 54 senators, including 11 Republicans, voted to support government negotiation.

"I think they're cognizant of the cost and the escalating cost of the Part D program," Sen. Olympia Snowe (R-Maine), the bill's main sponsor, told WebMD following the vote.

Sen. Charles E. Grassley (R-Iowa) who leads the Finance Committee, said government negotiation would lead to price controls and that it is unnecessary.

"This legislation requires negotiation," said Grassley, referring to existing bargaining on the part of private insurance plans.

Still, the vote could place pressure on Bush, who has been working this week to rally support for Part D among skeptical seniors. Many have complained that the program is too complex and offers too many choices for benefits.

Snowe said the vote placed significant pressure on the president to agree to alter Medicare policy. "I would think it does, especially with the climate we're in with implementation of Part D," she said.

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