According to the Pink Sheet:
“The Obama administration's proposal to establish an executive branch advisory council on Medicare payment issues may raise the threat of government negotiations for Medicare Part D drug prices. The legislative proposal was forwarded to House Speaker Nancy Pelosi July 17 by Office of Management and Budget Director Peter Orszag, who urged that some form of an Independent Medicare Advisory Commission be included in House health reform legislation.”
“Leaders of the House Energy and Commerce committee have agreed to incorporate the concept in the Tri-Committee health reform bill, committee Chair Henry Waxman, D-Calif., announced July 22. The concept is supported by the fiscally conservative Blue Dog Democratic coalition in the House, which has emerged as a key factor in moving the bill.”
“The White House proposal would establish IMAC to take on some of the Medicare payment and coverage decisions now handled by Congress - mainly payment rates under the Part B physicians' benefit as well as Part A, which pertains to inpatient hospital care. However, the group would also be authorized to recommend other Medicare payment reforms and the Part D prescription drug program is explicitly discussed in the document.”
“For the most part, where specific aspects of Part D are mentioned, they are described as areas where IMAC is not authorized to make recommendations. The document includes a section entitled "exclusions," stating "the council may not recommend any changes to the following aspects of the Medicare program" and listing about a dozen Part D citations. The intent of the exclusions section is to list the sections of the law ‘with which the Council's reform recommendations must remain consistent.’ "
“On closer look, the exclusion list has an interesting exception: "noninterference in 1860D-11(i)" of the Social Security Act.The noninterference clause in 1860D-11(i) has been in the crosshairs for Democratic lawmakers since the Part D program was established. It says the HHS Secretary ‘(1) may not interfere with the negotiations between drug manufacturers and pharmacies and PDP sponsors; and (2) may not require a particular formulary or institute a price structure for the reimbursement of covered part D drugs.’ “
“By excepting the clause from the list of ‘exclusions,’ the proposal can be read as allowing IMAC to reopen the issue, Sidley Austin partner William Sarraille agrees. It also shows that policymakers continue to pursue ways for the government to use its strength at the Part D bargaining table, he pointed out. ‘The Democrats are determined to get government negotiation,’ he said.”
Talk about Part D Deficit Disorder.
Many suggest that allowing the feds to directly negotiate for Part D is no different from the current VA scenario. But suggesting that the Veteran’s Administration “negotiates” prices for prescription drugs is a false premise.
Under rules set by Congress, to sell drugs to the VA, companies must offer each drug at a price that “represents the same discount off a drug’s list price that the manufacturer offers its most-favored nonfederal customer under comparable terms and conditions.” The medication must be offered “at a discount of at least 24 percent off [the] nonfederal average manufacturer price (NFAMP). An excess inflation rebate is also required, equal to the percentage by which the price increase for [the] drug has exceeded the consumer price index (CPI) in the prior period.” The manufacturer must make all of its drugs available through the Federal Service Schedule for any of its drugs to be eligible for reimbursement under the VA and Defense Department health systems, the Public Health Service (including the Indian Health Service), the Coast Guard, and the various state Medicaid programs.
A study by Professor Frank Lichtenberg of Columbia University found that the majority of the VA formulary’s drugs are more than eight years old and more than 40 percent are 16 years old or more. Just 19 percent of all prescription drugs approved by the FDA since 2000 are available to veterans; only 38 percent approved during the 1990s are.
There’s a big difference between negotiating and mandating – and it’s not a thin line. My fear is that a government negotiated Part D plan is but the first step towards a more strident program of government price controls.
(And remember, the Non-Interference Clause was originally authored by Senators Kennedy and Daschle.)
