No Negotiation on Medicare Rx Prices

Senate Blocks Bill to Lift Ban on Government Bargaining for Lower Prices

From the WebMD Archives

April 18, 2007 -- The Senate blocked a bill Wednesday giving the federal government the power to negotiate directly with pharmaceutical companies for lower Medicare prices.

The bill would have overturned a part of Medicare law that bans the government from such direct bargaining in the Part D prescription drug program. The vote was a defeat for Democrats, who made repealing the ban a key part of their domestic agenda.

A majority of 55 senators voted for the bill. But it still failed because procedural rules required 60 votes for passage. Six Republicans supported the bill.

Democrats blame the political influence of the pharmaceutical industry for derailing the measure, which in polls enjoys support from most seniors. Supporters of the repeal have long criticized the ban on direct price negotiations as a sweetheart deal inserted into Medicare law at the behest of drugmakers.

"Frankly the brand pharmaceutical industry was so concerned about what might happen if we had a debate that they were successful at filibustering and stopping this," says Debbie Stabenow, D-Mich., a member of the Finance Committee and a key supporter of the bill.

Drug companies currently negotiate prices with the private insurance companies carrying the Part D benefit. While the plans have considerable bargaining power, Democrats says it is no match for the market strength of Part D's nearly 40 million beneficiaries.

Opponents of the bill said the measure would disrupt Part D, which they said is working well and has gotten high satisfaction ratings from the majority of seniors.

"The private sector negotiating has created a low cost base for this program. It's working far better than anyone thought it would," says Republican Sen. Mel Martinez of Florida. The state has more than 3 million Medicare beneficiaries, second only to California.

Price Debate

One main difference between the two sides in Wednesday's vote was whether repealing the ban on direct bargaining would have any effect on drug prices. Opponents point to a letter issued by the Congressional Budget Office last week concluding the plan would have a "negligible" effect on federal drug spending.

But supporters point to a report released today by the liberal consumer group Families USA suggesting insurance company negotiating has failed to hold down prices. It concluded that prices for the top 15 prescription drugs used by seniors had a median increase of 9.2% over the last year. The list of drugs includes Celebrex, Prevacid, and Lipitor.

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Reaction to Vote

The main trade group for brand-name drugmakers says it is pleased by today's outcome.

"The Senate vote today reaffirms the commitment to millions of Medicare beneficiaries who rely on the Medicare prescription drug program for the medicines they need," Ken Johnson, spokesman for the Pharmaceutical Research and Manufacturers of America, says in a statement.

Democrats in the House passed a similar bill in January as part of their opening agenda for the 110th Congress. The next step in the Senate remains unclear, though supporters vowed Wednesday to force another vote on the measure in the near future.

David Sloane, AARP's director of government relations, warns that the group would inform its members about senators' votes.

"Given the overwhelming support for giving Medicare the power to negotiate, the will of the people will eventually be heard," he says in a statement.

WebMD Health News Reviewed by Louise Chang, MD on April 18, 2007

Sources

SOURCES: Sen. Debbie Stabenow, D-Mich. Sen. Mel Martinez, R-Fla. Ken Johnson, spokesman, Pharmaceutical Research and Manufacturers of America. David Sloane, director of government relations, AARP. "Medicare Part D Drug Prices Are Climbing Quickly," Families USA, April 18, 2007.

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