Friday, January 12, 2007

Grassley and Baucus Key to Any Drug Negotiation Compromise

In earlier posts, I have made the point that the House bill to require the federal government to negotiate Part D prescription drug prices will not pass the Senate.

Developments in recent days have confirmed that opinion for me. The ranking Republican on the Senate Finance committee, Chuck Grassley, has said he would lead a filibuster of the House bill on the Senate floor and has said he is confident he can keep the Dems from getting the necessary 60-votes.

President Bush yesterday issued a statement formally telling us what we already knew—that he would veto the bill if it passes both houses.

Democrats are now scrambling to find a compromise that can get through the Senate.

In recent posts, I pointed out that any bill that is just three pages long wasn’t a serious proposal anyway—I called the House bill a hollow political charade.

The fact that the Senate is looking at options for what is a far more complex issue just tells us that this is where the serious work will be done.

Senate Finance Chair Baucus, with his friend Chuck Grassley, will be pivotal in any possible compromise.

Baucus has said that he will not support the House bill—put a nail in that coffin.

What is interesting is that Baucus has said that he is interested in looking at a more targeted bill. For example, looking at price negotiation for drugs that have no competition—where the drug company has a monopoly in a drug class or their particular compound is unique. Often, these will be the “blockbusters” that typically have the very high prices. It looks like he would leave the rest of the market alone and let the Part D plans continue to make competition work.

Senators Snowe (R-ME) and Wyden (D-OR), have proposed a similar structure when there is only one drug in the class or when a drug was developed with substantial assistance from the government.

This might make some sense. However, to work the feds would have to either ban the drug if the drug company didn’t negotiate in good faith—not a great solution for people who need the new drug—or be able to unilaterally set an “appropriate” price. The latter would be a kind of “eminent domain” taking of the product for a price the government deemed fair.

Just giving the government the ability to negotiate for a smaller number of drugs would do nothing unless the feds had leverage to make the drug company come to the table. That is what is lacking from the current House bill and if it is lacking from a Senate compromise any new proposal will be just as hollow.

If Baucus can bring Republican Grassley and a handful of his colleagues onside with such a compromise, something Grassley has not ruled out, we could have a bill.

Such a compromise would really put the President’s threat to veto a drug negotiation bill on the line—but this “lame duck” is stubborn enough to do it!

But we have a long way to go.

Both Grassley and Baucus have said they do not want to harm the market and the success Part D has had so far—and I believe both of them on that score. Finding a compromise that lowers prices, because it has teeth, and does not “harm” the market is a tall order.

We have a long way to go and the Senate is going to take its time.

And, big pharma is going to really turn up the heat! The House bill wasn't going to harm them. A compromise like this would be a whole new ballgame.

Big pharma didn't oppose the House bill because they were afraid of it. They opposed it because they were afraid it would turn into this!!!!
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