The value of creating a larger government role in the negotiation of drug prices may be “overstated,” America’s Health Insurance Plans says.

In defending the prescription drug program under Medicare, AHIP said creating a larger government role in the negotiation of rebates from drug manufacturers would either compete with or replace the private plans that have successfully administered the Part D program,

The only way the government could achieve savings comparable to private plans would be to establish a national formulary akin to a Veterans Administration-type system, AHIP said.

Moreover, “Part D prescription drug plans are exceeding expectations by offering more comprehensive benefits and lower premiums than originally anticipated,” AHIP said. “Plan sponsors have accomplished this by using tools and techniques to promote quality while holding down costs to beneficiaries, reducing medication errors, and promoting clinically sound drug usage.”

AHIP’s comments were submitted in a statement to a hearing by the House Oversight Committee.

At the hearing, the panel charged in a report that switching drug coverage for seniors from Medicaid–a government-run program–to the Medicare Part D program has resulted in “windfall” profits to drug companies and insurers.

The report said that “taxpayers are paying far more for drugs under Medicare Part D than they do under Medicaid” and added that, “in effect, Medicare Part D has given the major drug companies a taxpayer-funded windfall worth billions of dollars.”

It said the “multi-billion dollar windfall is the result of a provision in the Medicare Part D law that switched drug coverage for the dual eligibles from Medicaid to Medicare Part D.

In the statement it distributed at the hearing, AHIP said that seniors eligible for both Medicare and Medicaid under the Part D program–which it called “financially vulnerable” beneficiaries–”can expect to see exceptionally large savings because of the low-income subsidies the program provides.”

AHIP observed that more than 10 million Medicare beneficiaries receive the additional assistance the program provides, and that, on average, Medicare will pay more than 95 percent of prescription drug costs for low-income subsidiaries.