- The Washington Times - Friday, January 12, 2007

The House yesterday passed legislation requiring the federal government to negotiate with pharmaceutical companies for lower drug prices for Medicare patients, disregarding a presidential veto threat.

The involvement of the federal government in setting drug prices for a Medicare drug benefit was a key sticking point for many years before the Bush administration called on Congress to pass the new Medicare law in 2003. By removing federal negotiating power, Congress assuaged the powerful pharmaceutical lobby and ultimately cleared the way for the bill’s passage.

But now that the Democrats control Congress, the prohibition on federal negotiation is under fire and yesterday the House voted 255-170, with 24 Republicans joining 231 Democrats in support of the legislation.

“Today we are correcting earlier abuses,” said the bill’s sponsor, Rep. John D. Dingell, Michigan Democrat and chairman of the Energy and Commerce Committee. “That Medicare bill was crafted in the dark of night by the lobbyists for pharmaceutical and insurance houses. The government can get lower drug prices.”

The House bill carries out Democratic campaign promises and would require the government to negotiate Medicare prescription drug prices rather than allow the current system that relies on direct negotiations between pharmaceutical companies and prescription drug plans.

The bill prohibits the government from establishing its own drug list, or formulary, which pharmaceutical companies say would restrict people’s access to drugs and instigate price setting by the government.

But, the Congressional Budget Office, which scores the cost and savings of legislation, this week told Mr. Dingell that his bill would achieve only negligible savings without a government-run drug list.

By putting a ban on a government drug list, the agency said, the government would not be able to encourage the use of particular drugs and therefore would lack the necessary negotiating leverage to get significant discounts on medications.

Rep. Henry A. Waxman, California Democrat and chairman of the Oversight and Government Reform Committee, said after the vote that the bill is “the first step and is right on principle.”

Consumers Union yesterday came out in favor of the bill.

“The House bill begins the process of bringing drug companies to the negotiating table and getting seniors and taxpayers real savings,” said Bill Vaughn, a policy analyst for the organization.

The 255 votes is far short of the two-thirds needed to override a veto by President Bush. Thursday the White House announced the president would veto the legislation because it says government interference in Medicare drug prices would stifle competition, limit access to medications and ultimately increase costs to taxpayers.

Prospects for a compromise bill between House and Senate lawmakers increased yesterday when Sen. Max Baucus, Montana Democrat and chairman of the Finance Committee, reversed course from his earlier stance and said the prohibition on federal drug-price negotiations should be eliminated.

Mr. Baucus is in the precarious position of being a Democrat from a conservative state, Montana, and being up for re-election in 2008. Mr. Baucus is not likely to support a bill that establishes a government drug list or creates a price ceiling, neither of which Mr. Dingell’s bill does.

On Wednesday, Sen. Olympia J. Snowe, Maine Republican, and Sen. Ron Wyden, Oregon Democrat, laid the foundation for Senate debate by introducing a bill that would repeal the federal ban on drug-price negotiations. The bill differs slightly from Mr. Dingell’s version in that it would require Medicare to help negotiate contracts for a drug if the federal government had invested a substantial amount of money in its development.

It also would require Medicare to negotiate contracts when a brand-name drug was available from only one manufacturer and no substitute was available. The Senate bill also would prohibit the government from creating a drug list.

Despite the watered-down version of the Senate bill, Sen. Charles E. Grassley, Iowa Republican, remains opposed to the House and Senate proposals, and said there are not enough votes in the Senate to override a veto.

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