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Bush would veto Medicare reforms
Yahoo News/AP
By DAVID ESPO, AP Special Correspondent
January 11, 2007

WASHINGTON - President Bush promised on Thursday to veto Democratic-drafted legislation requiring the government to negotiate with drug companies for lower prices under Medicare.

The House is to debate and vote Friday on the bill, which is one of a handful of priority items for Democrats who gained control of Congress in last fall's elections.

"Government interference impedes competition, limits access to lifesaving drugs, reduces convenience for beneficiaries and ultimately increases costs to taxpayers, beneficiaries and all American citizens alike," the administration said in a written statement.

Further, it said, competition already "is reducing prices to seniors, providing a wide range of choices and leading to a more productive environment for the development of new drugs."

Bush had already threatened to veto another of the top six bills Democrats are pushing across the House floor in the first two weeks of the new Congress. That's the measure, approved Thursday, to expand the extent to which federal funds could be used for embryonic stem cell research.

Several Democrats campaigned last fall as critics of the one-year-old program that offers prescription drug coverage under Medicare, saying it tilted too heavily toward profits for the pharmaceutical and insurance industries.

Currently, private drug plans negotiate how much they'll pay for the medicine their customers take. But the legislation under consideration Friday would require the secretary of the Department of Health and Human Services to do so.

"It is clear Medicare can do better and we are insisting that they do so," said Rep. John Dingell (news, bio, voting record), R-Mich., the bill's author.

Democrats have said they would use the savings produced by the negotiations to reduce a coverage gap that is common in many plans.

Republicans argue that individual insurance companies already negotiate lower prices on behalf of their customers, and that the Democratic approach was tantamount to calling for federal price controls.

They note that the program is coming in under budget and seniors are expressing support for the benefit.

"What we set out to do, we accomplished," said Sen. Jim Bunning (news, bio, voting record), R-Ky., during a hearing Thursday about the drug benefit. "We had a success, a very big success."

Also, the nonpartisan Congressional Budget Office said the legislation was unlikely to result in lower prices.

"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 (the plans) under current law," Donald B. Marron, the CBO's acting director, has written.

Actuaries for the Centers for Medicare and Medicaid Services came to the same conclusion Thursday.

Dingell, a leading supporter of the legislation, dismissed the CBO's letter.

"This isn't the first time the Congress and CBO differed on the amount of savings a particular bill would achieve," he said. "Common sense tells you that negotiating with the purchasing power of 43 million Medicare beneficiaries behind you would result in lower drug prices."

The legislation, expected on the House floor on Friday, also would ban any attempt to limit the array of drugs available to Medicare beneficiaries by creating formularies. That stands in contrast to the Veterans Administration, which has lower prices for its beneficiaries but uses formularies that limit patient choice.

Under the Medicare prescription drug program, insurance companies offer competing coverage plans, and seniors may enroll in the one they like best. The administration announced on Wednesday that 23.5 million seniors had enrolled in stand-alone plans as of Jan. 1.

While a majority of seniors are expressing satisfaction with the program, surveys also indicate that they overwhelmingly want the government to have the power to negotiate drug prices.

A survey of seniors for the Kaiser Family Foundation showed that about 81 percent of seniors want to let the government use its buying power to negotiate drug prices, including 67 percent who said they strongly favor such negotiations. Democrats say that another survey showed that requiring government negotiations polled more favorably than any other issue that Democrats included for their first 100 hours of the new Congress.

The issue is expected to have a tougher time in the Senate. However, Sen. Max Baucus (news, bio, voting record), D-Mont., gave supporters of the measure a lift on Thursday when he said the total prohibition on government negotiations for Medicare beneficiaries should be eliminated.

"I do not buy the argument that the sky will fall on the prescription drug market if we remove this clause," said Baucus, chairman of the Senate Finance Committee, which has jurisdiction over Medicare.

Associated Press Writer Kevin Freking contributed to this report.

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