Saturday, October 25th, 2014

The Obameter

Allow Medicare to negotiate for cheaper drug prices


"Allow Medicare to negotiate for cheaper drug prices."


Updates

Action unlikely before end of administration

As a candidate, Barack Obama promised to repeal a prohibition on Medicare negotiating directly with drug companies over prices for Medicare recipients. But it's widely viewed as unlikely to before the end of the current Obama administration.

"It's hard to tell you that anything will happen prior to the election this year. It's going to be a difficult year to get any kind of legislation passed," said David Certner, legislative policy director for AARP.

"It has not happened and isn't likely to happen," said Gail Wilensky, who directed the Medicare and Medicaid programs from 1990 to 1992 under President George H.W. Bush.

"The Obama administration only has so much control over that, but I doubt Congress is going to pass it," said Lee Goldberg, vice president of health policy for the non partisan National Academy of Social Insurance.

Sen. Al Franken, D-Minn.,  has introduced a bill that would repeal the ban on negotiations, but it is stalled in the Senate Finance Committee.

The administration included as part of its fiscal year 2013 budget a narrower proposal allowing Medicare to negotiate prescription drug prices in the same manner as the Department of Veterans Affairs. It would allow Medicare beneficiaries who are also covered by the income-based Medicaid to receive the same rebates that Medicaid receives for brand name and generic drugs.

But this, too, seems unlikely to happen given the near-gridlock in Congress.

It's always possible that the landscape may shift as we near the end of the year. But for now, with no real prospect in sight of repealing the ban, we're calling this promise Broken.

Sources:

Telephone interview with David Certner, AARP

Email interview with Gail Wilensky, former administrator U.S. Health Care Financing Administration

Telephone interview with Lee Goldberg, vice president of health policy for the non partisan National Academy of Social Insurance

U.S. Department of Health and Human Services, FY 2013 Budget in Brief

Health care law takes different tack on Medicare drug negotiating

During the presidential campaign, Barack Obama promised to "allow Medicare to negotiate for cheaper drug prices." Such a provision was not included in the final health care law that passed both chambers of Congress and was signed by the president, but other provisions went in the same direction.

The initial House-passed health care bill would have required the secretary of Health and Human Services to negotiate drug prices directly with pharmaceutical manufacturers for Medicare Part D plans starting in 2011.

That language did not make it into the final bill. Instead, the drug industry agreed to other provisions in negotiations with the White House. These include paying billions of dollars annually in new fees beginning in 2012, and providing a 50 percent discount on prescriptions filled through the Medicare Part D coverage gap beginning in 2011.

In a sense, the final bill didn't require ongoing negotiations with the drug industry over drug prices, but instead essentially negotiated some of the key terms in advance. It's unclear whether consumers will end up getting a better deal with the final bill's provision or one that allowed HHS to conduct ongoing negotiations. Because of this uncertainty, we'll hold off on making a final determination on this promise, and instead call it In the Works.

Sources:

Text of H.R. 3590, the Patient Protection and Affordable Care Act, accessed April 7, 2010

Kaiser Family Foundation, "Side-by-Side Comparison of Major Health Care Reform Proposals," accessed April 7, 2010

Drug promise affected by deal with White House

Ever since Congress approved the Medicare drug plan proposed by President George W. Bush, Democrats have groused that it was a huge giveaway for the pharmaceutical industry because it did not allow Medicare to negotiate drug prices. As a candidate, Barack Obama vowed to change the program to allow Medicare negotiate lower prices.  But now, Obama's promise is being slowed by a political deal involving his plan for health care reform.

The prescription drug industry was one of the first big players in the health industry to go along with President Obama's plans for health care reform. Drugmakers agreed to forgo $80 billion over 10 years as part of reform efforts to reduce costs.

As the negotiations in Congress over health care have progressed, though, it appears the White House will not push Obama's campaign promise to allow Medicare to negotiate lower drug prices, nor another measure to allow consumers to buy imported prescription drugs.

Billy Tauzin, a former congressman and now president of Pharmaceutical Research and Manufacturers of America, or PhRMA, has told several reporters that his group has an agreement that the White House will back away from plans to allow Medicare to negotiate with drugmakers for lower drug prices. Reports from the Los Angeles Times, the New York Times, and the Huffington Post have outlined the contours of the deal.

The White House has confirmed the $80 billion threshold for the deal and didn't dispute the idea that it was dropping support for negotiated drug prices .

Some members of Congress have said they do not feel bound by any deal the White House made, so this may not be the end of the story. Still, the Senate Finance Committee recently approved health legislation, and nothing in there allowed Medicare to negotiate lower drug prices. Given that committee action and the news reports on the matter, we rate this promise Stalled.

Sources:

Los Angeles Times, White House deal with drug firms draws flak , Aug. 14, 2009

Los Angeles Times, Obama gives powerful drug lobby a seat at health care table , Aug. 4, 2009

New York Times, White House Affirms Deal on Drug Cost , Aug. 5, 2009

Huffington Post, White House Confirms: Deal With Big Pharma Bars Price Negotiations , Aug. 7, 2009

Newsweek, Let"s Make a Deal: Obama, Big Pharma, and you. (Minus you.) , Oct. 13, 2009