Canton Repository

November 16, 2006

Regula open to drug negotiation, wants seniors to have choice

By Paul M. Krawzak
Copley News Service

WASHINGTON Rep. Ralph Regula, a top lawmaker on health care issues, won't rule out supporting Democratic efforts to allow the federal government to negotiate drug prices as part of the Medicare prescription benefit.

But he said Wednesday he wants to make sure that any changes in the benefit would preserve seniors' ability to choose from a wide array of drugs.

"We ought to ensure that people have a variety of choices," the Bethlehem Township Republican said. "There's one concern that they have and that is that they ... will have choices as to which drug they want that will best serve them."

"Every human is different, and people have different reactions to drugs," he said.

After their successful capture of the House and Senate last week, Democrats, including presumed House Speaker Nancy Pelosi, D-Calif., have said they intend to pass legislation in the first 100 days of the next Congress to allow the government to negotiate Medicare drug prices.

Rep.-elect Zack Space, the Dover Democrat who won the race to succeed convicted Rep. Bob Ney in the 18th District, favors giving the government the power to negotiate prices in the Medicare program.

The 2003 Medicare law, which added prescription drugs to the list of government-subsidized health care, prohibits the government from negotiating with drug makers.

Instead, the program relies on competition between dozens of providers of drug plans to hold down costs. The plans negotiate drug prices with pharmaceutical companies and then offer their menu of drugs, with varying premiums and co-payments, to consumers in the Medicare program.

Democrats such as Rep. Sherrod Brown of Avon, who won the Ohio Senate race, have argued that allowing the government to negotiate drug prices for Medicare could save substantial sums of money that would be available to provide a more generous benefit.

The federal government engages in direct negotiation of drug prices with pharmaceutical companies in a much smaller, more limited drug benefit administered by the Veterans Administration.

Regula has played a key role in funding health care initiatives from his position as chairman of an appropriations subcommittee. But he would have little input in any changes to the Medicare plan, which is under the jurisdiction of the House Ways and Means Committee.

The 18-term lawmaker believes government negotiation of drug prices in Medicare is "doable, maybe." But he noted that Democrats have yet to explain exactly how it would work.

Several health care experts in Washington think tanks said they are unsure how the plan would proceed. They also are skeptical that government negotiation would lead to significant savings.

Len Nichols, director of health policy programs at the New America Foundation, said pharmacy benefit managers who negotiate with pharmaceutical companies on behalf of private Medicare plans generally have more leverage than the government would.

He said this is because they are buying drugs for non-Medicare insurance plans as well as the Medicare benefit.

"If you completely replace the existing private plans' negotiation of prices with manufacturers (with) one single Medicare buyer, then you lose the market share advantages which the PBMs bring based upon their non-Medicare enrollees," he said.

Robert D. Reischauer, president of the Urban Institute, said the Veterans Administration drug benefit is different from Medicare in that it offers a more limited range of drugs, available only from veterans facilities or by mail order, to a smaller population.

"Everybody has to keep in mind that the people who are negotiating the prices now on behalf of elderly and disabled (in the Medicare program) by and large are huge pharmacy benefit managers who have a lot of commercial business as well as their Medicare business," he said.

"They have every reason to negotiate quite hard with the drug companies to get good prices."