White House Says President Bush Would Veto Legislation Allowing Federal Government To Negotiate Medicare Prescription Drug Prices

Main Category: Medicare / Medicaid / SCHIP
Also Included In: Pharma Industry / Biotech Industry
Article Date: 20 Apr 2007 - 16:00 PDT

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The White House on Tuesday said President Bush would veto Senate legislation (S 3) that would allow the government to negotiate prices with pharmaceutical companies under the Medicare prescription drug benefit, CongressDaily reports. A Statement of Administration Policy issued Tuesday said that the bill would "impede competition and reduce convenience for beneficiaries." HHS Secretary Mike Leavitt told Republican senators that granting the government authority to negotiate drug prices could lead to price controls in a future presidential administration. Leavitt added that he would not negotiate prices if he were allowed to do so (Johnson/Kivlan, CongressDaily, 4/17). A Congressional Budget Office cost estimate finds that the bill would produce negligible savings and would require $2 million in appropriations in fiscal year 2008 to enact another provision in the bill, which would establish a process to evaluate the effectiveness of prescription drugs covered under the benefit (Reichard, CQ HealthBeat, 4/17).

Vote Expected To Be Close
Sen. Norm Coleman (R-Minn.) -- who is expected to face a close re-election campaign next year -- on Tuesday broke with Senate Republicans and the White House, saying he will support the bill. Coleman said, "While America's seniors continue to benefit from greater access to affordable drugs, there still may be room to improve the program and an appropriate role for the secretary of [HHS] to play, without undermining the power of competition, which has driven prices down" (Frommer, St. Paul Pioneer Press, 4/18). Senate Majority Leader Harry Reid (D-Nev.) said he did not "have a lot of confidence" that the bill would pass a cloture vote when it is considered on Wednesday because of "the power of the insurance industry and its closeness to the Republicans." Senate Finance Committee ranking member Chuck Grassley (R-Iowa), who opposes the bill, said, "We're still counting [votes]. Not everybody's been contacted yet. My impression is it's going to be very close" (Johnson, CongressDaily, 4/18).

C-SPAN's "Washington Journal" on Tuesday included a discussion with Leavitt about the bill ("Washington Journal," C-SPAN, 4/17). Video of the segment is available online.

Opinion Pieces
The following letter to the editor and editorial address the issue of negotiations under the drug benefit.

• Leavitt, Tallahassee Democrat: "The bottom line is that seniors under Medicare Part D are getting the drugs they need at prices they can afford," Leavitt writes in a Democrat letter to the editor. "If government interferes in the market, it will have to withhold access to some drugs to force makers to lower prices," Leavitt writes, concluding, "Let's not change what's working" (Leavitt, Tallahassee Democrat, 4/18).
  
  
• Wall Street Journal: "We opposed the prescription drug bill as a vast new entitlement, but there's no denying the program's innovation of using private-sector competition has worked far better than critics predicted," a Journal editorial states, adding that the Senate legislation would "likely result" in Medicare beneficiaries finding that "fewer of their therapies are covered." Moreover, "If government price controls erode the profits [pharmaceutical] companies can earn to produce these often life-saving medications, the pace of new drug development will almost certainly delay treatments for AIDS, cancer, heart disease and the like," the editorial states, concluding, "Congress is proposing dangerous medicine, and if it becomes law, seniors may be the first victims" (Wall Street Journal, 4/18).
  

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