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Medicare drug program

Bush Administration opposes Democratic plan to lower Medicare drug prices through volume purchasing discounts

Tuesday, November 14, 2006 by: Jerome Douglas
Tags: Medicare drug program, Medicare reform, drug prices


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(NewsTarget) This past weekend, the Bush administration stated that it would be strongly opposing a top priority of the Democratic Party -- the authorization of the U.S. government to negotiate with drug companies to ensure lower prices for Medicare beneficiaries.

The Secretary of Health and Human Services, Michael O. Leavitt, said he saw no possibility of a compromise on the issue.

"In politics, most specific issues like this are a disguise for a larger difference. Government negotiation of drug prices does not work unless you have a program completely run by the government. Democrats say they want the government to negotiate prices. What they really want is government-run health care."

Leavitt added that price negotiations involving the federal government would undermine the whole structure of the Medicare drug benefit, which relies on competing private plans. The current structure of Medicare involves dozens of plans which are available in every state. These plans charge different premiums and co-payments and cover different drugs.

A Medicare law passed and enacted in 2003 clearly prohibits the federal government from negotiating drug prices or establishing a list of preferred drugs. But representative Nancy Pelosi -- a California Democrat who is in line to become the House speaker -- said the House will begin legislation to repeal that ban in its first 100 hours under Democratic control. The U.S. House of Representatives fell under Democratic control as of the results of last week's mid-term elections.

In addition to Pelosi, some Democrats in the U.S. Senate desire a similar federally-negotiated Medicare drug structure. Eight newly elected Senate Democrats all say Medicare should have the power to negotiate with drug makers. Senator-elect Amy Klobuchar, D-MN, said "The government negotiates big discounts for the prices of drugs for our veterans but the drug companies got Congress to make it illegal to negotiate for lower prices under Medicare."

Currently under federal law, drug makers must provide a discount or rebate equal to at least 15 percent of the average manufacturer price for most brand-name drugs covered by Medicaid. Federal law also guarantees discounts for the Department of Veterans Affairs. The department already negotiates with drug makers to secure discounts on top of those guaranteed by law.

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