Better bargaining on drugs
A MAJOR FLAW in the Medicare prescription drug benefit Congress adopted in 2003 is that it specifically prohibited Medicare from bargaining directly with pharmaceutical companies to get bulk discounts on drugs. Recently, House Democrats -- with the help of 24 Republicans -- redeemed one of their campaign pledges by passing a bill requiring the government to negotiate with the drug industry for lower prices.
Passage of this bill advances the debate on the best way to curb Medicare drug prices, which are now set through dealings between insurance companies and drug makers. Ideally, better administration of the new benefit would yield enough savings to end or reduce the program's "doughnut hole" of uncovered prescription costs for many recipients.
Despite the solid 255-170 vote in favor of the measure, it still faces an uncertain future. The Democrats' margin in the Senate is just one vote, and the chairman of the Finance Committee, Democrat Max Baucus of Montana, has gone only so far as to favor ending the current prohibition against negotiating with the drug companies. He said the House bill requiring such bargaining would have to be discussed. President Bush quickly promised a veto of the House measure, and even the large majority in the House vote is short of a veto-proof margin. Finally, the lobbying juggernaut of the pharmaceutical industry can be counted on to slow Medicare-bargaining legislation.
For all the criticism of the House bill from the White House and congressional Republicans, the measure stops short of providing Medicare all the authority it would need to get the lowest possible prices, which is one reason the Congressional Budget Office believes it may produce no savings. The bill does not permit Medicare to bar drugs whose companies decline to sell them at discounted prices, a right that the Department of Veterans Affairs has. This provision is not just a concession to the industry. Some congressmen are concerned about a possible backlash against direct Medicare purchases of drugs if that means their constituents will not get the choice of medications they prefer.
But with the authority granted by the bill, a secretary of health and human services would have a bully pulpit to hold down the prices of specific, popular drugs for which Medicare recipients are paying substantially more than the VA or Medicaid. President Bush's first HHS secretary, Tommy Thompson, used such authority in driving down the price the government paid during the 2001 anthrax scare for the antibiotic Cipro. When Thompson left office, he said one of his great regrets was that the Medicare drug benefit bill included its prohibition against just that kind of government bargaining. The House bill begins the crucial process of putting that arrow in the secretary's quiver.
