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Democrats want Medicare buying power

Early edition

Published January 11, 2007


Can Medicare, which represents 43-million people, get a lower price on a drug than a private insurer who can only deliver a couple million members?

Medicare beneficiaries could find out if Democrats in Congress have their way. But the effort is likely to be blocked by the White House.

On Friday, the House is expected to pass legislation that requires Medicare to begin negotiating drug prices directly with manufacturers, rather than leaving it to the private insurers who offer Medicare drug plans.

When the government-subsidized drug plan for seniors was passed in 2003 it explicitly prohibited the government from getting involved in such price discussions.

The House vote is part of the newly elected Democratic majority’s ambitious “100 hours” slate of reform legislation.

Though the bill may squeak through the Senate next month, it is widely expected that President Bush will veto any law that gets the government involved in setting drug prices.

Despite the slim chance Medicare will get a chance to test its negotiating clout, the vote has touched off a fire storm of debate over just how effective such a strategy might be.

Advocates of the bill cite a recent study showing that Medicare prices for the 20 most popular drugs are 58 percent higher than the same drugs available to military veterans.

Unlike Medicare, the Department of Veterans Affairs has negotiated an automatic 24 percent discount off the average price wholesalers pay. The VA also has a fairly limited drug list or formulary and fills most of its prescriptions through mail order.

Rep. Frank Pallone Jr., D-N.J., chairman of the House Energy and Commerce subcommittee on health, said Medicare could get prices similar to the VA’s even without a formulary.

“I have every reason to believe that there is enough persuasion power, with different things that could be implemented by the secretary, that could get down to those levels,’’ he said.

He added that Democrats will consider further changes down the road.

Opponents, including Mike Leavitt, head of Health and Human Services, the agency responsible for Medicare, warns that government price setting would limit seniors’ drug choices.

U.S. Rep. Joe Barton, R-Texas, says it will mean price controls on the drug industry that would destroy innovation. Drug makers have responded with full-page ads saying that, after its first year, the Medicare drug program has an 80 percent satisfaction rate among enrollees.

“Give it a chance,’’ say full-page ads by the Pharmaceutical Research and Manufacturers of America, an industry trade group. “It’s working.”

On Wednesday, the non-partisan Congressional Budget Office concluded that the legislation would have a “negligible effect” on federal Medicare spending. Private insurers get discounts from drug makers in exchange for inclusion on a formulary that does not include competitors.

The House bill does not permit Medicare to limit the drugs it offers seniors. It simply requires the secretary of health and human services to use his agency’s “wealth of expertise” to push for discounts.

While the debate rages in Washington, many seniors in the Tampa Bay area support a new approach to drug pricing.

“I think probably 95 percent of seniors would say go for it,’’ said Harold Densmore , who advises from 25 to 50 people a day on Medicare drug plan options as a SHINE coordinator in Pinellas County.

“It never made sense that the VA can negotiate but Medicare can’t.”

Gail Goodsell  of Clearwater was getting most of her prescriptions free from the drug companies before the Medicare drug plans began. Last year, those free offers evaporated and Goodsell, 67, found herself paying up to $500 a month for her drugs. “I’m not sure Congress can change that, but I certainly hope so,’’ she said.

Kelly Bagley  a 69-year-old retiree in Pinellas Park, fell into the Medicare coverage gap at the end of 2006 and in the past year had to pay about $500 out of pocket for prescriptions. This year she hopes to use free samples from her doctor to get her over the hump.

“I think Congress should let Medicare negotiate drug prices,’’ she said. “After all, it’s our money that’s floating Medicare.’’

Information from wire stories was used in this report. Kris Hundley can be reached at or (727) 892-2996.

[Last modified January 11, 2007, 20:12:49]

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