Despite the threat of a veto by President George W Bush, the US House of Representatives passed legislation on Friday which would require the government to negotiate with drugmakers in order to get the best prices for medicines covered under the Medicare prescription drug (Part D) benefit.
Bill H R 4, the Medicare Prescription Drug Price Negotiation Act of 2007, was approved in a 255-170 vote, with 231 Democrats and 24 Republicans voting for the measure and no Democrats opposing it.
House Speaker Nancy Pelosi, who had pledged to introduce H R 4 as early as possible in the new Democrat-led chamber, described the vote as “a resounding victory for American’s seniors over the special interests.” She added: “this is just the beginning of Democratic efforts to ensure that quality health care is accessible and affordable for the American people.”
However, the day before the vote, President Bush had warned that the bill was not acceptable.
“Government interference impedes competition, limits access to lifesaving drugs, reduces convenience for beneficiaries and ultimately increases costs to taxpayers, beneficiaries and all American citizens alike,” the administration said in a written statement, which also pointed out that competition among private insurers under the Medicare drug benefit “is reducing prices to seniors, providing a wide range of choices and leading to a more productive environment for the development of drugs.”
At a January 12 briefing, ahead of the vote, White House Press Secretary Tony Snow repeated the President’s warning. “We have a Medicare prescription drug reform that has been saving people significant amounts of money; it is effective. If this bill is presented to the President, he will veto it,” Mr Snow told journalists.
Both H R 4 and a similar bill in the Senate - S 250, the Medicare Enhancements for Needed Drugs Act of 2007 - would remove the express ban on the federal government from negotiating directly with drugmakers on price of products covered by the Medicare benefit. Instead, the bills introduce a requirement that the Health and Human Services Secretary should conduct such negotiations. The current HHS Secretary, Mike Leavitt, has frequently stated his opposition to the legislation and, earlier this month, said that the Centers for Medicare and Medicaid Services’ dramatic new reduction in its estimates for the benefit’s costs showed that such moves were not necessary.
Bill “will have no effect,” say reviewers
Moreover, the day before the vote, CMR actuaries who had reviewed H R 4 said they did not believe that government price negotiations would produce any savings. “The inability to drive market share via the establishment of a formulary or development of a preferred tier significantly undermines the effectiveness of this negotiation,” said Paul Spitalnic, spokesman for the group which carried out the review. “Manufacturers would have little to gain by offering rebates that aren't linked to a preferred position of their products, and we assume that they will be unwilling to do so,” he added.
Their findings echoed those reported by the Congressional Budget Office, which stated: “CBO estimates that H R 4 would have a negligible effect on federal spending because we anticipate that the Secretary would be unable to negotiate prices across the broad range of covered Part D drugs that are more favourable than those obtained by PDPs [prescription drug plans] under current law.”
Commenting on these findings, CMS acting administrator Leslie Norwalk said: “Part D drug plans produced greater-than-expected savings by competing for Medicare beneficiaries and aggressively negotiating with drug companies. Strong, competitive bids and informed beneficiary choices are bringing down premiums, without government interference in drug price negotiations.”
Pharmaceutical Research and Manufacturers of America chief executive Billy Tauzin said that the debate “is really about patient choice.” While the industry is committed to making the Medicare prescription drug benefit even better, “we remain strongly opposed to restrictive policies such as price controls that would limit the choice of medicines available to tens of millions of seniors and disabled Americans and undermine the program’s early success,” he said.