The last of the three US House committee health reform bills has been approved and would authorize the federal government to negotiate prices for the Medicare prescription drug plan.

The Energy and Commerce Committee’s final mark-up of America’s Affordable Health Choices Act (HR 3200) was approved last Friday night (July 31) on a 31-28 vote after two weeks of tough negotiations. At the last minute, an amendment was approved which would allow Medicare, the federal health insurance programme for seniors and disabled people, to negotiate prices with manufacturers for drugs supplied through the scheme’s prescription drug plan (Part D).

The 2003 Medicare Modernization Act (MMA), which created Part D and was passed under a Republican Congress, actively prohibits the Secretary for Health and Human Services (HHS) from becoming involved in pricing deals with drugmakers, stipulating that such negotiations should be conducted by insurers and their agents only.

Another major feature of the agreed bill is the establishment of a public health insurance plan with payment rates based on negotiations between the HHS Department and providers, and which would operate a drug formulary to curb costs. This initiative was included on the insistence of the Committee’s seven “Blue Dogs” – members of a fiscally conservative Democratic coalition.

“Blue Dogs believe fundamental reform of our health care system is needed to control rising health care costs, increase quality and value, and improve access to coverage and care. Comprehensive health care reform must be deficit-neutral and bend the cost curve in the long run. We also believe health care reform must preserve patient choice of provider and maintain competition within the marketplace,” said Coalition spokeswoman Rep Stephanie Herseth Sandlin.

But the Pharmaceutical Research and Manufacturers of America (PhRMA) has attacked the final approved House bill, describing it was “well-intentioned” but “a step in the wrong direction. “

If its provisions pass, the federal government “will wind up rationing health care and dictating what medicines doctors can prescribe to their patients. This may well prevent patients from gaining access to the critically important medicines they need to fight diseases such as cancer, diabetes and heart disease,” warned PhRMA vice president Ken Johnson.

“Even the Congressional Budget Office has said that government negotiation of Medicare Part D prices would save little, if any, money,” says the industry group, and it points to the policy deal agreed by the industry with the White House and the Senate Finance Committee in June which, it says, will provide $80 billion in “meaningful” cost-savings over 10 years. But the Energy and Commerce Committee chairman, Representative Henry Waxman, has pointed out this initiative was agreed purely between the White House and the Senate panel, and has not involved the House in any way.

Finally, says PhRMA, the bill would hurt patients and kill jobs, as it “would effectively act as a tax increase by raising premiums for seniors" in the Medicare programme, "severely restrict patient access and choice and hurt an innovative sector that currently employs hundreds of thousands of workers. The result could mean significant job losses in the middle of a recession. In addition, the legislation allows broad override of protections for Medicare and Medicaid beneficiaries by unelected officials, with no chance for review,” the group claims.

Nevertheless, the agreement on the bill - which will now be merged with provisions reported by the House Committees on Ways and Means and Education and Labor for a planned vote by the full House in September - was described by Rep Waxman as “a historic moment for the House of Representatives and a defining moment for our country."

"It is a significant victory that all three committees in the House have worked together to pass comprehensive health reform legislation for all Americans. This bill will deliver the results the nation's health care system so desperately needs: lower costs, better quality, and broader coverage. I hope that when we return from recess, the House will act expeditiously to enact this bill into law,” he said.

- In 2007, two Democrat bills sought to overturn the MMA’s ban on federal government involvement in the negotiation of drug prices for Medicare. The House version, the Medicare Prescription Drug Price Negotiation Act (HR 4), would have required the HHS Secretary to have a negotiating role, while the Senate version would only “allow” such powers, although its sponsor, US Senate Finance Committee chairman Max Baucus claimed it would “untie [the Secretary’s] hands to help seniors.”