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Part D Fix Divides House, Senate

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As Democrats in the House appeared poised at press time to pass legislation that would force the Bush administration to negotiate drug prices for the prescription drug program under Medicare directly with drug manufacturers, the outlook for such legislation ultimately becoming law grew dimmer and dimmer.

Democrats in the House were scheduled to vote on H.R. 4 on Jan. 12. The bill was introduced with 191 co-sponsors on Jan 4. With Democrats holding a 232-200 majority in the House, the bill was expected to easily pass the House, albeit with strong Republican objections.

The bill, the Prescription Drug Price Negotiation Act of 2007, says “the Secretary shall negotiate with pharmaceutical manufacturers the prices that may be charged for covered Part D drugs.”

The bill also allows drug plans to negotiate lower prices than those negotiated by HHS. Under the bill, a drug manufacturer could simply refuse to offer a larger discount to the government than it has offered to drug plans “without any consequences,” according to Ira Loss, a pharma analyst at Washington Analysis.

Specifically, Sen. Charles Grassley, R-Iowa, ranking minority member of the Senate Finance Committee, said he would filibuster such legislation in comments earlier in the week. And, at the Jan. 11 hearing, Sen. Max Baucus, D-Mont., chairman of the panel, did not embrace the House bill and its mandate for the government to negotiate drug prices directly with manufacturers.

In his statement, Baucus made clear the committee is just assessing the current program and the proposals for changes, including the House bill and a bipartisan bill introduced Jan. 10 in the Senate.

Baucus suggested that perhaps rather than mandating direct negotiations with pharma manufacturers, Congress should require the Center for Medicare and Medicare to instead open up more of its pricing data to public scrutiny as a means of ensuring the lowest prices for consumers.

In comments released in connection with the Senate hearing, America’s Health Insurance Plans issued a statement opposing the House bill, noting that more than 39 million Medicare beneficiaries–representing approximately 90% of the Medicare population–have prescription drug coverage either through Part D directly, an employer plan that is supported through Part D, or other sources.

“We do not support such legislation because the Part D program has exceeded expectations, is working for seniors and previous efforts to impose price controls have had unintended consequences,” the AHIP statement said.

“We urge the committee to continue to support the competition, choice and innovation that have played such an important role in delivering savings and value to our nation’s Medicare beneficiaries,” the statement concluded.

In a floor speech Jan. 9, Grassley disputed the need for the House bill.

“Everyone has heard the old saying that ‘if it ain’t broke, then don’t fix it’,” Grassley said. “And this certainly applies here and the evidence shows it.”

In addition, the Congressional Budget Office on Jan. 10 issued a letter to Rep. John Dingell, D-Mich., primary sponsor of the legislation, saying the proposed legislation “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 favorable than those obtained by PDPs (prescription drug programs) under current law.”

The bipartisan Senate bill proposed as an alternative to H.R. 4 would give the government the authority to directly negotiate with pharma manufacturers but is more comprehensive and specific than the House bill. It was introduced by Sens. Ron Wyden, D-Ore., and Olympia Snowe, R-Maine.

But Washington Analysis’s Loss said “its chances of getting the 60 votes necessary to clear the Senate is questionable at best.”