Senate to debate Medicare drug bill

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The Senate is scheduled to begin debate this week on a bill that would allow the federal government to negotiate Medicare prescription prices directly with pharmaceutical companies, despite the threat of a presidential veto.

Supporters of the Democrat-crafted proposal say the measure would result in significantly lower prescription-drug prices for seniors who participate in Medicare Part D. Critics say the bill promotes unnecessary government intrusion into the free market and would do little to reduce prices.

Debate could begin as early as tomorrow, said a spokeswoman for Sen. Max Baucus, Montana Democrat and chairman of the Senate Finance Committee.

The bill would strike language in the 2003 Medicare Modernization Act that prohibits the secretary of the Health and Human Services Department from interfering in negotiations for drugs.

"From now on, when America's seniors are paying too much for their medicines, every health and human services secretary will have an additional tool to help them," said Mr. Baucus, one of the bill's main sponsors. "The Senate should seize the opportunity [this week] to exercise good judgment and make the drug benefit work even better for our seniors."

The House passed a version of the bill in January, by a vote of 255-170, that requires Health and Human Services to negotiate with drug makers.

The Bush administration has threatened to veto the House bill, and a White House spokesman said Friday that the president wasn't inclined to support the Senate version.

"Clearly from what we've seen from the legislation it doesn't make sense," spokesman Tony Fratto said. "The Hippocratic oath says you should do no harm, but this bill at the very least does no good, and very well could do harm."

Medicare Part D, initiated last year as part of the federal health insurance program for the elderly and disabled, covers most or all of the cost of prescription drugs, depending on the plan.

Under Part D, insurers deal with the pharmaceutical industry and receive a federal subsidy for administering a drug plan. Participants can choose among several plans.

The Senate bill, introduced by Majority Leader Harry Reid, Nevada Democrat, requires insurers that operate Part D drug plans to share price data with Congress.

Proponents say the proposal isn't unique, citing a Veterans Affairs program in which the agency negotiates directly with pharmaceutical companies.

Critics rebut that argument by saying the VA model includes a much more limited list of prescriptions than offered by most private insurers under Part D.

Republican leaders say benefits of the bill are overstated. They point to Congressional Budget Office reports that show negligible savings under the Senate and House proposals.

"This is bad for Medicare beneficiaries and other consumers alike," said Sen. Charles E. Grassley of Iowa, the ranking Republican on the Senate Finance Committee. "A government takeover of Medicare plans' successful negotiations with drug companies is not the answer."

Critics of the legislation say that forcing manufacturers to sell drugs at a lower cost for seniors will increase prices for others as the companies try to regain lost profits. If profit margins shrink, they say, manufacturers will be less inclined to invest money into research and development of new drugs.

"We have already implemented a plan that is working. We don't need meddling for the sake of meddling or a new system conjured up for political convenience," said Sen. Michael B. Enzi, Wyoming Republican.

Mr. Baucus said accusations that the bill would force the health and human services secretary to impose price controls or set drug prices are disingenuous.

"We want the [health and human services] secretary to be able to check under the hood, and if there is a problem, we want the secretary not to be barred from doing something about it," he said.