February 1, 2005—A group of Senate Democrats and moderate Republicans on Tuesday revived a proposal that would give the government power to bargain over the price of prescription drugs for Medicare.
The bill, similar to a measure introduced in the 108th Congress, would authorize the Health and Human Services Secretary to negotiate drug prices with pharmaceutical companies for the new Medicare drug benefit, which takes effect Jan. 1, 2006.
"As we implement the Medicare Modernization Act ... it is also crucial that we address the flip side of the coin, which is affordability," said Sen. Olympia J. Snowe, R-Maine, who sponsored the bill along with John McCain, R-Ariz.; Ron Wyden, D-Ore.; Dianne Feinstein, D-Calif., and Russell D. Feingold, D-Wis.
In addition to giving the secretary the option to negotiate prices, it would require such negotiations in cases where a health plan requests help dealing with a pharmaceutical company, or when so few private drug plans are offered in a region that "fallback" plans are in effect.
Snowe and Wyden cast the bill as an essential part of containing the costs of the prescription drug law (PL 108-173). The cost of the law was calculated by the Congressional Budget Office at $395 billion over 10 years before the bill was passed in November 2003, but subsequent estimates by the administration have shown the costs could surpass $534 billion.
The bill would set up "comprehensive, market-based cost containment," Wyden said. The current law, he said, "is equivalent to standing in Price Club and buying toilet paper one roll at a time."
During his Senate confirmation hearings earlier this month, HHS Secretary Michael O. Leavitt pledged to try to keep the costs of the new drug benefit in check. He has not said whether he would support efforts to give him price negotiating authority. The Bush administration and Republicans in Congress opposed such power when the law was being written.
During a farewell speech, outgoing HHS Secretary Tommy G. Thompson indicated that he would liked to have had that ability.
Recent reports of escalating drug prices have lawmakers concerned as well.
"Given the reports of rapidly rising drug prices . . . it remains a national imperative to ensure the cost does not increase," Snowe said.
A study from the Government Accountability Office found drug prices have increased an average of 4.6 percent per year from 2000 to 2004. But some lawmakers say pharmaceutical companies this year raised some prices at two to three times the rate of inflation.
Some lawmakers suspect that pharmaceutical companies had raised prices in anticipation of the implementation of the drug benefit in 2006.
The Snowe-Wyden proposal had no momentum in the 108th Congress and is expected to face opposition from GOP leaders who say that negotiating drug prices would be akin to government price fixing.