Friday, April 20, 2007

Medicare Drug Negotiation Bill Fails in the Senate

Democrats fell short of the required 60-votes to pass a bill that would have allowed the Secretary of HHS the power to negotiate Medicare Part D drug prices. Democrats did get 55 votes while 42 Senators opposed the bill. The vote generally followed party lines.

The Medicare Part D drug negotiation bill was little more than a political charade anyway since the bill would not give HHS any leverage in negotiating Medicare Part D drug prices. Unless Medicare has the right to exclude a drug from coverage under Medicare, there isn't any reason for a drug manufacturer to lower their price. The lack of any negotiating leverage made this a pretty hollow bill.

If the bill had passed and been combined with a similar (and just as hollow) House bill, President Bush would have vetoed it making this a just a political exercise.

Even though this was a very weak bill, the pharmaceutical industry pulled out all of the stops to kill it. Their worry was that even this weak bill could have been manipulated by regulation into something more powerful by a future Democratic Secretary of HHS. If nothing else, it also represented the "camel's nose under the tent" since it could have served as the basis of an expansion by a more liberal Congress and President down the road.

Ironically, private Medicare Part D insurance companies have this leverage--they can exclude a particular manufacturers product (although they must include drugs from every class) or place it in a co-pay tier that puts it at a disadvantage from competitors drugs. That leverage makes it possible for insurers to get lower prices.

You can also hear my Wednesday evening comments on public radio's "Marketplace:" Medicare Drug Bill Stalls

My January comments on the House drug negotiation bill: The Democrats Hollow Part D Proposal
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