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Senior Citizen Politics
CMS Joins Those Saying Negotiating Drug Prices for
Medicare Will Not Work
Cites weakness not allowing establishment of
preferred list of drugs
 January 11, 2007 The Centers for Medicare &
Medicaid Services threw its hat in the ring with those saying the
Democrats' proposal for negotiating with drug companies for lower prices
will not accomplish its goal of lowering drug prices. The statement from
CMS further highlights what has become the focal point of debate the
legislation does not allow the establishment of a preferred list of
drugs, which would give the government negotiating power with the
companies that want their drugs on this list.
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Negotiating Medicare Drug Prices Hits Obstacles: CBO
Sees No Savings, GOP Senators to Filibuster
Most news is bad news for
proponents of bargaining for drugs
 January 11, 2007 With debate beginning today and
a vote expected tomorrow on the Democratic proposal (HR 4) to have the
Secretary of Health & Human services negotiate with pharmaceutical
companies for better prices on drugs marketed through the Medicare drug
program, a splash of cold water on the idea came in a letter from the
Congressional Budget Office saying the drug prices would not be lowered
by the legislation. Basically, Acting CBO Director Donald B. Marron said
he doubted the government could do a better job that the prescription
drug plans. (See CBO letter below news report.)
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Administration Says Medicare Drug Program Cost Drop
Shows No Need to Negotiate on Drugs
Most antifraud complain reports by prescription drug
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January 8, 2007 Immediately after the Bush
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Leavitt says it proves there is no need for negotiated drug prices. The
Medicare daily report by KaiserNetwork.org also finds problems with the
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Politics for Senior Citizens |
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CMS issued a news release that said its
"independent actuaries" have reviewed H.R. 4 and concluded "that
government negotiations mandated in the bill would not produce any
savings."
"Although the bill would require the Secretary to
negotiate with drug manufacturers regarding drug prices, the inability
to drive market share via the establishment of a formulary or
development of a preferred tier significantly undermines the
effectiveness of this negotiation," explained Paul Spitalnic, Director
of the Parts C and D Actuarial Group in the Office of the Actuary.
"Manufacturers would have little to gain by
offering rebates that aren't linked to a preferred position of their
products, and we assume that they will be unwilling to do so."
Spitalnic add, The actuaries expect that the Part
D plans will continue to be the source of meaningful negotiations with
manufacturers as they will continue to have the authority to establish
formularies and define a preferred tier. We would not expect H.R. 4 to
have any effect on these negotiations or the prices that are ultimately
paid by Part D."
CMS also pointed to the letter yesterday from the
Congressional Budget Office (CBO), which noted: CBO estimates that H.R.
4 would have a negligible effect on federal spending because we
anticipate that the Secretary would be unable to negotiate prices across
the broad range of covered Part D drugs that are more favorable than
those obtained by PDPs under current law.
Part D drug plans produced greater-than-expected
savings by competing for Medicare beneficiaries and aggressively
negotiating with drug companies, said Leslie V. Norwalk, Acting
Administrator of CMS.
Strong, competitive bids and informed beneficiary
choices are bringing down premiums, without government interference in
drug price negotiations.
Earlier this week, Health and Human Services
Secretary Michael O. Leavitt, who has stated his objection to the
proposal, noted that the most recent Part D budget estimates show that
payments to Part D plans are projected to be $113 billion lower over the
next ten years.
Importantly, of the $113 billion reduction, $96
billion is a direct result of competition and significantly lower Part D
plan bids, Norwalk added.
According to the CMS Office of the Actuary, the
estimates of costs for the Medicare Part D prescription drug benefit for
the FY 2008 budget cycle show that net Medicare costs are now expected
to be 30 percent less -- $189 billion lower -- than originally predicted
when the benefit was created in 2003. In addition, based on strong,
competitive bids by health care plans for 2007, average monthly premiums
for the basic benefit will be approximately $22 for beneficiaries, down
from $23 in 2006.
The original estimate for 2007 premiums was $38.
The CMS statement said, "While there are currently
over 23 million Medicare beneficiaries receiving drug coverage through
Part D prescription drug and Medicare Advantage plans, plans negotiating
prices with drug companies and pharmacies cover about 241 million
people, or 80 percent of the population. Indeed, these are the same
companies that negotiate on behalf of members of Congress for their
prescription drugs."
The bottom line from the news today is that
beneficiaries are paying less in premiums and taxpayers are seeing
billions of dollars in lower costs, without the need for government to
interfere and reduce access or convenience for beneficiaries, concluded
Acting Administrator Norwalk.
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