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Newsletter Article


Fall Agenda: Medicare Drug Program Revisions

By Drew Armstrong, CQ Staff

September 3, 2007

Bills: HR 4, S 3

Outlook: With a presidential veto threat and other health-related legislative priorities filling the legislative calendar, Congress is not likely to clear a bill this year that would give the government power to negotiate Medicare drug prices.

Synopsis: Since the Medicare drug benefit (PL 108-173) was enacted in 2003, Democrats have argued that the prices of drugs covered in the program could be lower if the government were allowed to negotiate with providers. Changing the law to provide that bargaining power was part of the Democratic majority's agenda this year. The House passed its bill in January, but work in the Senate has stalled, and veto threats by the president have left lawmakers reluctant to continue.

House Democrats passed their bill within a week of its introduction. The legislation would require the Health and Human Services Department to negotiate drug prices on behalf of the many private plans that administer the Medicare drug benefit. The House plan would not, however, allow a formulary—an exclusive list of drugs that negotiators could use as leverage to win lower prices from drug makers.

Critics of the plan have said that without a formulary, the proposal would not actually save the government money. The Congressional Budget Office backs up their claims. In a Jan. 10 letter to House Energy and Commerce Chairman John D. Dingell, D-Mich., CBO said the bill "would have a negligible effect on federal spending." To get real savings, lawmakers might have to write in a formulary or some other type of negotiating leverage.

In the Senate, the Finance Committee backed off further from the House version, writing a less-stringent bill that would allow government negotiation but would not require it.

Absent a negotiating requirement, the Senate bill includes what may remain a potent and politically achievable tool: It would require private companies that run drug coverage plans to turn over cost and price data to Congress. Lawmakers might then use that information to make a future case for government negotiation if they could show that private plans were not reducing prices sufficiently.

The bill never came to a vote on passage, however. Republicans blocked it by defeating a motion to invoke cloture, or end debate, on a motion to proceed to the bill. Supporters came up five votes short of the 60 needed to continue work on the measure. Lawmakers in both chambers have made no indication that they plan to take up the stalled bill again this year.

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