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Of the promises Democrats made on their way to taking over Congress this year, their pledge to require the federal government to negotiate prescription-drug prices for Medicare recipients seems the easiest to keep. But while the idea of reducing drug costs by using the purchasing power of the government is popular and could be effective, it will be vigorously fought in the Senate because the issue is not merely about lower-priced drugs.
Health and Human Services Secretary Mike Leavitt last month touched on the underlying fight. “The idea of the government negotiating drug prices really isn’t about the government negotiating drug prices,” he said. “It’s a surrogate for a much larger issue, which is really government-run health care.”
Mr. Leavitt is opposed to negotiating drug prices. It may be strange to have the person in charge of health care for the federal government declaring, in effect, that the government shouldn’t run health care. But the administration’s purpose of privatizing parts of the Medicare drug benefit, called Part D, was to establish an opportunity for private insurers to deliver public health care. Government price negotiation would be a retreat from that position.
All four members of Maine’s congressional delegation support government-negotiated prices. They do so for pragmatic reasons – lower prices means more coverage for the same money. One of the worst aspects of the current Part D formula is the gap in coverage known as the doughnut hole, the funding space between standard coverage and complete coverage when beneficiaries are entirely responsible for drug payments. Closing that gap, especially for the poor, would significantly improve the benefit.
For a reluctant Senate, where 60 votes are needed to close off debate on a bill, there are a number of ways to find effective compromise. For instance, Congress could set a sunset, or time limit, on a price-negotiation bill, with a requirement that a comparison be made to determine whether the government savings were substantial, the range of prescription drugs in which savings occurred was adequate and the investment in new drugs by pharmaceutical companies was maintained. A similar, longer-term option could be carried out with a limited number of types of drugs, though the primary weapon in government negotiation is its massive buying power.
The federal government negotiates drug prices on behalf of Medicaid recipients and veterans, providing savings to both. There is no reason it could not be successful with Medicare as well, but for senators who want to be cautious, there are half steps that might produce the savings without surrendering the current system permanently.
The question is whether Congress can give up the ideological fight long enough to achieve savings for American seniors.
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