January 13, 2007

House Democrats Pass Bill on Medicare Drug Prices

By ROBERT PEAR

WASHINGTON, Jan. 12 — Defying a veto threat, the House on Friday passed a bill to require the government to negotiate with drug manufacturers to obtain lower drug prices for Medicare beneficiaries.

The vote, 255 to 170, was cast with lightning speed eight days after the new Congress convened. No Democrat voted against it, while 24 Republicans joined the 231 Democrats voting in favor.

Representative Christopher S. Murphy, a freshman Democrat from Connecticut, said, “This bill has symbolic importance, breaking the grasp of the drug industry on this town.”

It is, Mr. Murphy added, “the beginning of a process to repair the Medicare drug benefit.”

The measure is unlikely to become law in its current form. But some version, focusing on certain types of very expensive drugs, has bipartisan support in the Senate and could eventually be included in a measure to revamp the drug benefit, which a Republican-led Congress created in 2003.

The bill, which fulfills a Democratic campaign promise, says the secretary of health and human services “shall negotiate with pharmaceutical manufacturers the prices that may be charged” to Medicare drug plans.

The 2003 law prohibits such negotiations. The drug benefit is delivered by private insurers, subsidized by the government. These companies have negotiated substantial discounts with drug manufacturers. Under the House bill, insurers could seek discounts deeper than those negotiated by the government.

Representative Joe L. Barton, Republican of Texas, predicted that the bill would die “a nice benign death.”

The White House press secretary, Tony Snow, said, “If this bill is presented to the president, he will veto it.”

Democrats, who like to portray Republicans as a tool of special interests, said a veto would hand them an issue that could be used to good effect in the 2008 elections.

Some experts, including the Congressional Budget Office and Medicare actuaries, say they doubt that the bill would save money for older people or the government.

If the government, for example, tried to negotiate a discount for a particular drug and the manufacturer refused to lower its price, it is not clear what, if any, recourse Medicare would have. Without the ability to steer patients to particular drugs, the budget office said, Medicare would not have the leverage to obtain significant discounts.

Representative Tom Price, Republican of Georgia, described the bill as “a solution in search of a problem.” The cost of the drug benefit is lower than expected, Mr. Price said, and the number of drug plans available to beneficiaries — more than 40 in every state — is higher than expected.

In the House debate, each party used somewhat contradictory arguments. Republicans said the bill would not save any money because the government could not restrict access to drugs. But then they said the legislation would limit the drugs available to doctors and patients.

“A government bureaucrat will be empowered to determine what kinds of drugs our seniors have access to,” the Republican whip, Representative Roy Blunt of Missouri, said. “If the government could not reach a deal with a drug company, seniors would not have access to those drugs.”

For their part, Democrats said Medicare was overpaying for drugs and could obtain much lower prices if it negotiated with drug manufacturers, as the Department of Veterans Affairs does. But Democrats said they did not want to give Medicare two of the most powerful tools used by the veterans agency: the ability to establish a “federal ceiling price” and a uniform list of covered drugs, known as a national formulary.

While sketchy about details of their proposal, Democrats were clear that their purpose was to help beneficiaries and to reduce drug companies’ profits in the Medicare market.

Representative John D. Dingell, Democrat of Michigan and chief sponsor of the bill, said, “Those who insist that the sky will fall if drug companies negotiate lower prescription prices are arguing that those companies should continue to skin a fat hog at the expense of taxpayers and beneficiaries.”

Another Democrat, Representative Lois Capps of California, said: “We can vote in favor of large drug companies that have raked in record profits under the Medicare drug plan. Or we can vote in favor of our senior constituents. Common sense tells me that the big drug and insurance companies would not be so adamantly opposed to this bill if they did not fear that it could result in actual price reductions.”

Republicans said Medicare drug plans already had the power to negotiate drug prices and were using it. But Representative Bill Pascrell Jr., Democrat of New Jersey, said, “This power is splintered now among numerous private plans.”

The Medicare bill was one of the high-priority measures that Speaker Nancy Pelosi promised to pass in the first 100 hours of the new Congress.