It’s just Medicare Hot Air according to Fact Check.org.  Democrats claim it will bring lower drug prices, which it won’t, and Republicans claim it is system of severe price controls, which it is not.Â
What Experts Say
As Democrats promised, their bill states that “the Secretary [of Health and Human Services] shall negotiate with pharmaceutical manufacturers the prices (including discounts, rebates, and other price concessions) that may be charged” for drugs that Medicare will pay for. That would go even farther than removing the prohibition on negotiation contained in current law. By using the word “shall” it actually requires the secretary to act.
However, in the next section the bill also says, “Nothing in paragraph (1) shall be construed to authorize the Secretary to establish or require a particular formulary.” Translated, that means the secretary would have no authority to set up a preferred list of drugs for which Medicare  will pay. Without such a list, or the threat of keeping some drugs off the formulary, drug companies would have no particular incentive to cut their prices.
What Experts Say
For that reason, the bipartisan Congressional Budget Office concluded that H.R. 4 would have a “negligible” effect. In a letter to Dingell on Jan. 10, CBO’s acting director Donald B. Marron said:
Marron: CBO estimates that H.R. 4 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 PDPs [private 'prescription drug plans'] under current law. Since 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. In that context, the Secretary’s ability to influence the outcome of those negotiations would be limited. For example, without the authority to establish a formulary, we believe that the Secretary would not be able to encourage the use of particular drugs by Part D beneficiaries, and as a result would lack the leverage to obtain significant discounts in his negotiations with drug manufacturers.
Medicare actuaries reached a similar conclusion. Paul Spitalnic, director of the actuarial group responsible for the drug program, known as Part D of Medicare, was quoted in an HHS news release  as saying:
Spitalnic: Manufacturers would have little to gain by offering rebates that aren’t linked to a preferred position of their products, and we assume that they will be unwilling to do so. . . . We would not expect H.R. 4 to have any effect on . . . the prices that are ultimately paid by Part D.
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Reference’s:
Congressional Budget Office, “ H.R. 4, Medicare Prescription Drug Price Negotiation Act of 2007, January 10, 2007, Cost estimate for the bill as introduced on January 5, 2007″ 10 Jan 2007.
Center for Medicare & Medicaid Services, “CMS Actuaties Conclude That H.R.4 Would Have No Effect on Lowering Drug Prices,” news release , 11 Jan 2007.
“Negotiating Lower Drug Prices,” editorial, The New York Times, 11 Jan 2007 (subscription required)
“The Wrong Prescription: Government should not negotiate drug prices in Medicare,” editorial, The Washington Post, 13 Jan 2007: A18.
ONE WORD..NO!
Tom Price Tells Retirees Their Prescription Drug Costs are Already Low Enough
The Cherokee Ledger News recently reported that Dr. Price voted not to let Medicare negotiate drug prices to help save both the program and retired Americans money. He did so against the wishes of the AARP and in contrast to most of his colleagues in congress. The Veterans Administration does negotiate prices, and saves vets millions.
Why the “no”vote, you ask? Because he’s bought and paid-for by the medical lobby. His votes are easy to predict. If the bill moves money into the hands of the medical lobby, he’s all over it. If it moves money out of the medical industry, it’s a no-go (I’m sorry, it’s “bad for patientsâ€).
But let’s take a look at Price’s excuses:
• “The less involvement government has in medical care, the better.â€
–So does this mean Price wants to eliminate Medicare? No, I didn’t think so. This is just meaningless rhetoric.
• 90 percent of AARP members support giving Medicare the power to bargain for lower drug costs.
– To them Price says, “I’m sorry that AARP’s taken such a partisan approach on this.â€
• “Washington bureaucrats will decide which drugs will be available for patients, not from a scientific or safety standpoint, but purely based on money. Many drugs would be knocked off the approved list if Medicare had the power to negotiate, resulting in a smaller choice of drugs being available to seniorsâ€
– False. The bill (unfortunately) did not authorize Medicare to remove a non-discounted drug from coverage. The stronger Veterans Administration policy does.
• “Nobody negotiates with the federal government. The federal government tells you what to do.â€
– Well, he voted to make sure the first sentence remained true.
• “Government never has quality in mind when it comes to medical care; its whole objective is decreasing costs.â€
–As opposed to health insurance companies, who think of nothing but quality and don’t care about expenses? Sure.
• “The free market has continually proven more adept at lowering expenses.â€
–Whoops, I thought it was the government that was manically focused on decreasing costs. Well, his quote is true, if you realize it’s referring to health insurance company expenses, not patients’ out-of-pocket expenses.
• “Many quality physicians have been forced out of business by Medicare requirements.â€
– Even if that’s true, it was no doubt due to Medicare’s reimbursements for office visits and other direct physician care, not its prescription reimbursement policies.