Bush to VETO Lower Drug Prices
Bush: No Medicare price negotiations
White House vows veto on eve of House action
William L. Watts, MarketWatch
Last Update: 5:23 PM ET Jan 11, 2007
WASHINGTON (MarketWatch) -- President Bush would veto Democratic legislation allowing the federal government to negotiate drug prices for seniors and others enrolled in Medicare's prescription-drug plan, the White House said Thursday.
Congressional Democrats have made price negotiations a top feature of their legislative agenda. The House is expected Friday to pass legislation that would lift the restriction on drug-price negotiations.
'If [the legislation] were presented to the president, he would veto the bill.'
— White House Office of Management and Budget
The Democratic bill would lift a noninterference clause in the Medicare prescription-drug law. Backers argue that the measure would allow the Health and Human Services Department to negotiate lower prices on a number of popular drugs, allowing the savings to be used to plug holes in coverage for many seniors.
The White House and congressional Republican leaders say competition between private drug plans is resulting in lower prices for seniors, and that negotiations would be tantamount to federal price controls.
Competition between the private drug plans that offer the prescription-drug benefit "is reducing prices to seniors, providing a wide range of choices, and leading to a more productive environment for the development of new drugs," the White House Office of Management and Budget said. "If [the legislation] were presented to the president, he would veto the bill."
House Republicans pointed to a review by the nonpartisan Congressional Budget Office that found the House proposal wouldn't result in lower prices.
"CBO estimates that [the bill] 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 private drug plans under current law," acting CBO director Donald Marron wrote in a letter Wednesday to House Energy and Commerce Committee Chairman John Dingell, D-Mich., the author of the bill.
Dingell's legislation offers few details on how the government would go about negotiating lower prices.
Dingell brushed off the CBO findings, telling the Associated Press that "this isn't the first time the Congress and CBO differed on the amount of savings a particular bill would achieve."
Sens. Olympia Snowe, R-Me., and Ron Wyden, D-Ore., on Thursday introduced a similar bill in the Senate.
The HHS secretary "should be examining performance and pointing out where drug plans need to improve," Snowe said.
"But today if he pointed out a product on which poor discounts were being achieved, he would be accused of interference," she said in a statement. "And if a plan reported intransigence, he could not respond. That makes no sense. It serves neither taxpayer nor the Medicare beneficiaries."
The Health and Human Services Department on Monday released new figures showing that the estimated cost of the drug plan were lower than originally anticipated, thanks to competition between drug-plan providers.
The administration now expects the drug benefit to cost $640 billion between 2006 and 2015, down from its initial estimate of $926 billion.
"Our new estimates provide clear evidence that consumer choice is working," said HHS Secretary Michael Leavitt. "Government interference will result in fewer choices and less consumer satisfaction. Actuaries have told us that government interference will not lead to lower drug prices either."
The Democratic proposal has the backing of the 38 million-member AARP. The seniors group has embarked on a nationwide advertising campaign in an effort to bolster support for price negotiations.
William L. Watts is a reporter for MarketWatch.
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