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Despite Veto Threat, House Approves Medicare Drug Bill January 12, 2007

Posted by notapundit in Congress, Politics, US News.
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WASHINGTON (Dow Jones)–Ignoring President George W. Bush’s threat of a veto, the U.S. House on Friday voted 255 to 170 to require the federal government to negotiate drug prices for Medicare beneficiaries.

Passage of the bill makes good on a campaign promise by Democrats, but fell short of the 290 votes Democrats would need to override Bush if he does veto the bill.

The measure now heads to the Senate where Democrats have already begun work on a bipartisan version of the bill.

Friday’s debate in the House could hardly have been better picked to highlight the core differences in principles between the two political parties.

“When government negotiates, we get the best price,” said Oversight and Government Reform Committee Chairman Henry Waxman, D-Calif.

“Do you trust bureaucrats or do you trust the forces of competition,” fired back Rep. John Shadegg, R-Ariz.

“Government doesn’t negotiate, it price sets,” said Rep. Lee Terry, R-Neb. “That’s the heavy hand of government.”

Diving into the details of the bill, Rep. Eliot Engel, D-N.Y., said the bill doesn’t require price-setting.

“It simply says it should give the government the best shot at negotiating drug prices,” he said.

Engel said both Wyeth Pharmaceuticals, a division of Wyeth (WYE), and Novartis Corp.’s (NVS) Novartis Pharmaceuticals Corp. operate in his district.

“I’d never support a bill that would stifle innovation,” Engel said.

The bill would repeal the so-called non-interference clause of the 2003 Medicare prescription drug act.

The non-interference provision prohibits the Secretary of Health and Human Services from participating in the negotiations between drug manufacturers, pharmacies and sponsors of prescription drug plans involved in the Medicare drug benefit. It also prohibits the secretary from requiring a particular formulary or price structure for covered Part D drugs.

Instead the secretary would be required to negotiate drug prices. The secretary, however, wouldn’t be allowed to create a drug formulary, a listing of drugs to be covered by a benefit plan, which often excludes high-cost drugs.

Democrats pointed to a variety of studies showing that the government could save under the plan. For example a Families USA study showed Medicare drug plan prices for the top drugs prescribed for seniors are 58% higher than the same drugs provided to veterans by the Department of Veterans Affairs.

Republicans, in turn, pointed to reports showing no savings under the bill. For example, a Congressional Budget Office report found that because the secretary couldn’t create a drug formulary, the secretary wouldn’t have “the leverage to obtain significant discounts in his negotiations with drug manufacturers.”

On Thursday, the White House announced that Bush would veto the bill if it was cleared by Congress in its current form.

“Government interference impedes competition, limits access to life-saving drugs, reduces convenience for beneficiaries, and ultimately increases costs to taxpayers, beneficiaries, and all American citizens alike,” the White House’s Office of Management and Budget said.

In the 2006 campaign, Senate Democrats also promised to repeal the drug act’s non-interference rule, but are likely to propose a more narrowly targeted version of the bill.

With one leading Republican already threatening to filibuster the House bill if it is brought to the Senate floor, Democrats must revise it if they want to see it passed. A filibuster takes 60 of 100 votes to overcome and Democrats control just 51 seats in the chamber.

Sens. Ron Wyden, D-Ore., and Olympia Snowe, R-Maine, already have introduced what many think will be the basis for the Senate version of the bill.

Their bill would allow the secretary to interfere in drug negotiations, but only require such interference in certain circumstances. Intervention would be required to set the price for any drug available from only one manufacturer, a drug created with substantial taxpayer funding for its research and development and any drug for which a private insurer offering a Medicare benefit plan requests help in price negotiations.

“The fact is with the Medicare population rapidly growing, it simply makes sense to give the Secretary of HHS the ability to negotiate,” said Snowe.

Doing so will “assure the kind of fiscal responsibility so essential to protecting this vital health entitlement,” she said.

By John Godfrey, Dow Jones Newswires

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