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Medicare
Debate Turns to Pricing of Drug Benefits
By
Robert Pear, the
That provision epitomizes much of the bill, which relies on insurance
companies and private health plans to manage the new drug benefit. They
could negotiate with drug companies, but the government, with much greater
purchasing power, would be forbidden to do so. Supporters of the provision say it is necessary to prevent the
government from imposing price controls that could stifle innovation in
the pharmaceutical industry. Critics say the restriction would force the
government and Medicare beneficiaries to spend much more for drugs than
they should. The House passed the Medicare bill on Saturday by a vote of 220 to 215,
after an all-night session and an extraordinary three-hour roll call.
President Bush and House Republican leaders persuaded a few wayward
conservatives to vote for the bill, which calls for the biggest expansion
of Medicare since its creation in 1965. In the Senate, debate continued on Sunday, with Democrats asserting
that the bill would severely undermine the traditional Medicare program.
Senator Edward M. Kennedy, Democrat of Massachusetts, said he would lead a
filibuster against the measure. Democrats acknowledged they did not have the votes to sustain a
filibuster. But they said they would use points of order to slow the
legislation, whose passage is a priority for President Bush. Senators Dianne Feinstein of But Senator Don Nickles, Republican of Oklahoma, said he would vote
against the $400 billion bill. "We are building a new expansion onto a house that's teetering on
a cliff," Mr. Nickles said. "We are saddling future generations
with enormous liabilities." No provision has been mentioned more often in Congressional debate than
the section that prohibits the government from interfering in negotiations
with drug companies. Democrats have repeatedly asserted that Medicare could provide more
generous drug benefits if, like other big buyers, it took advantage of its
market power to secure large discounts. But many Republicans have expressed alarm at the possibility that
federal officials might negotiate drug prices. The Medicare program, they
say, dwarfs other purchasers, and the government is unlike other customers
because it could give itself the power to set prices by statute or
regulation, just as it sets the rates paid to doctors and hospitals for
treating Medicare patients. Under the bill, the government would subsidize a new type of insurance
policy known as a prescription drug plan. "In order to promote competition," the bill says, the
secretary of health and human services "may not interfere with the
negotiations between drug manufacturers and pharmacies and prescription
drug plan sponsors, and may not require a particular formulary or
institute a price structure for the reimbursement" of drugs. Tommy G. Thompson, the secretary of health and human services, said
Sunday that if Congress wanted to give him the power to negotiate drug
prices, it could do so next year. But "that's not a reason to oppose
this Medicare bill," said Mr. Thompson, who negotiated with Bayer to
obtain a lower price for the company's anthrax medicine, the antibiotic
Cipro, in 2001. Representative Tom Allen, Democrat of Maine, said it struck him as
absurd that "the government will not be able to negotiate lower
prices" for the drugs on which it plans to spend $400 billion in the
next decade. "The bill will allow the pharmaceutical industry to continue
charging Representative Peter A. DeFazio, Democrat of Representative Rahm Emanuel, Democrat of Illinois, said: "We could
bring down drug prices if we allowed the secretary of health and human
services to negotiate on behalf of 40 million seniors. That is what Sam's
Club does." Sam's Club, a chain of warehouse stores that is a division of Wal-Mart,
acts like a purchasing agent for its members, who can buy low-price goods. Republicans say that health plans will be able to negotiate lower drug
prices for Medicare beneficiaries, just as they do for large groups of
employees with private insurance. The Senate majority leader, Bill Frist, Republican of Tennessee, said:
"We tend to use the purchasing power of private entities like
individual plans to hold down costs over time. The Democrats tend to
emphasize, and thus push for, more government control, government
purchasing. We just think that competition through the private sector,
through bulk purchasing and negotiation, is a more effective means to hold
down prices." Medicare drug plans would be offered by state-licensed insurance
companies. They, in turn, could hire pharmacy benefit managers like
Express Scripts, Medco Health Solutions and AdvancePCS to negotiate with
drug makers, issue discount cards and line up networks of pharmacies. The bill would also create a benefit: an initial physical examination
offered to new beneficiaries as a "welcome to Medicare." This
benefit illustrates a shift toward greater coverage for preventive
services. Under the bill, Medicare would cover screenings for heart disease and
diabetes and would pay experts to coordinate care for elderly people with
chronic illnesses. Senator John Kerry, Democrat of Massachusetts, took time out from his
presidential campaign to join the Senate debate. The Medicare bill, he
said, "lines the pockets of powerful moneyed interests and leaves But Senator Susan Collins, Republican of Maine, urged support for the bill. "This historic opportunity may never come again, and we cannot afford to let it pass," she said. Copyright
© 2002 Global Action on Aging |
