House passed HR 4's negotiate prices for Medicare Drugs Bill -- but it is flawed (William Chirolas)

[Tace]

William Chirolas -- World News Trust

Jan. 15, 2007 -- Well, the House has passed HR 4, the Medicare drug reform that that will require Health and Human Services Secretary Michael Leavitt to negotiate prices on behalf of 29.4 million Medicare recipients, but leaves out the structure that allows that negotiation to result in lower prices -- the structure the Veteran's Administration uses for drug purchases, an approach that has been so successful in getting a lower price for drugs in that system.

Tony Snow is quoted last week as saying that the actuaries (and I am an actuary) at both the budget office and the Department of Health and Human Services say the bill will have little or no effect on federal spending and provide no substantial savings to the government.

And indeed CBO estimates that H.R. 4 would have a negligible effect on federal spending because they assume 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 PDPs under current law, because the legislation specifically directs the Secretary to negotiate only about the prices that could be charged to PDPs, and explicitly indicates that the Secretary would not have authority to negotiate about some other factors that may influence the prescription drug market, we assume that the negotiations would be limited solely to a discussion about the prices to be charged to PDPs.

Given that the Secretary is not allowed to establish a formulary, there is little ability to encourage the use of particular drugs by Part D beneficiaries, so there is little leverage to obtain significant discounts.

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[napi21]

1. A good negotiator would be able to do the job! If the current

HHS Sec. can't or won't, then fire him and get someone who can and will do the job!