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Medicare Prescription Drug Price Negotiation Act of 2007

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Location: Washington, DC


MEDICARE PRESCRIPTION DRUG PRICE NEGOTIATION ACT OF 2007 -- (House of Representatives - January 12, 2007)

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Mr. HULSHOF. I appreciate the gentleman yielding.

Mr. Speaker, my colleague from the State of Washington mentioned medical school. Let me recount an old axiom that with learned in law school. We were told: If the facts are against you, argue the law. If the law is against you, argue the facts. If the facts and the law are against you, pound the podium.

Ladies and gentlemen, there has been a lot of podium pounding on the other side of the aisle today. The question is this, shall the government interfere with or intervene in a prescription drug plan that is working?

Now, the majority seeks through H.R. 4 to strike this nonintervention clause. First of all, is anyone having a flashback to 1993 and 1994 talking about government taking over health care?

But, more importantly, my colleague from the State of California, the incoming chairman of the Health Subcommittee, and 203 of his colleagues are about to do an abrupt, en masse, about face. Because in the Congressional Record of June 28 of 2000, you had this nonintervention clause, and 204 Democrats said, we don't want to give the Secretary the ability to negotiate in roll call 356.

Now, what could possibly explain this inconsistency? Could politics be at play?

The gentleman from Washington talked about some history. Let us go back over the committee history, because my colleagues from Ways and Means are here.

First of all, during committee action we were chided there would be no plans available under the Republican plan.

Then, of course, when we saw the plethora of plans, we heard the complaints from your side, there are too many confusing choices that seniors have across the country. Then you wagged your finger at us and said, well, we need to legislate the premium at $35, and then the total cost of the program is going to explode the deficit. Remember hearing that?

Yet, on the other hand, as has been discussed, the average premium is $22. In the State of Missouri, you could even have a premium for under $15 if you choose it. Of course, we have seen how those program costs have come down.

We heard from your side that the drug companies were going to do a bait-and-switch, that we were going to have low ball that first year and then we would see those prices being jacked up. Lord help us, what's happened? Drug prices have gone down. Imagine premiums and prices coming down in health care.

Then my colleague from the State of California said to his colleagues, it is okay, once the seniors hit the donut hole, they will be angry, and they will be outraged. Then we have seen, of course, that every senior at least has had the opportunity to have full coverage, including coverage for the donut hole. You just can't find it within yourself to say we got one right.

Just like welfare reform, surely, Mr. Leader, once every 10 years, you can say the Republicans got it right. We are witnessing cost containment and competition by incorporating private sector market principles within the public sector programs provision of drug coverage. Let us lighten up on the podium pounding, say no to government interference and no to H.R. 4.

Mr. Speaker, I rise in opposition to H.R. 4, and I would like to divide my remarks into two main thoughts: first, ``if it ain't broke, don't fix it,' and second, the laws of intended and unintended consequences.

Mr. Speaker, the Medicare Part D Benefit ain't broke.

But Medicare was broken before there was a drug benefit. When I came to Congress, one of the issues I heard about most often from my constituents was the need for prescription drug coverage for seniors. In 1965, when Medicare was created to ensure that seniors had some access to health care, prescription drugs were not a primary mode of treatment, and thus not covered.

But as medical science advanced, and miraculous treatments became available via prescription drugs, Medicare still languished without a drug benefit, and many seniors were faced with the brutal decision between buying their medicine or paying for food, clothes, housing, and other necessities.

Seniors do not have to make that brutal decision anymore.

Under the law, millions of seniors who previously could not afford prescription drugs are now receiving the medicines they need.

More than 40,000 volunteers in communities across the country worked during the enrollment period, counseling beneficiaries and sponsoring events to help people with Medicare. I would like to commend these volunteers, volunteers like Debbie Catlett from the Hannibal Nutrition Center, who lovingly helped her friends and neighbors sign up for drug coverage.

The system the Republican Congress set-up has been remarkably successful: The average premium in 2006, originally projected to be $37 per month, was only $23; and rather than increasing to the projected $40 per month in 2007 it lowered to $22 for this year. In Missouri, we have even less expensive options available, the lowest costing only $14.90 per month. Imagine that, health care premiums going down!

Seniors are saving, on average, $1,200 a year on prescription drugs. At the same time, Part D recipients saw a 13 percent increase in the number of medications available. According to polls, about 80 percent of America's seniors are satisfied with their prescription drug plans.

All that is on the micro level, what individual seniors are enjoying and saving; but let's look at the macro level. Over 90 percent of seniors now have drug coverage--if these seniors are paying less, the government must be paying more to pick up the slack, right?

Wrong.

The Medicare drug benefit cost nearly $13 billion less than expected in its first year, 30 percent below the $43 billion that had been budgeted.

Long-term savings are even greater. HHS Secretary Leavitt just announced that the independent CMS actuaries are lowering their estimate of the cost of the benefit over the next decade by another 10 percent, with almost all of the new savings resulting from competition. The actuaries' new estimates show that total net Medicare costs are 30 percent lower, or $189 billion less, for the same budget window (2004-2013) than the actuaries originally anticipated before the Medicare drug benefit was implemented.

The long and the short of it is, Medicare Part D is a big, fat success.

Look, the majority is upset that the Republican Congress enacted a successful, popular program, and the ``let Medicare negotiate low prices like the VA' polled well for them (I've seen the polling numbers). But a bumper sticker phrase aimed at coopting that success isn't good policy.

I've discussed how the program isn't broken and doesn't need fixing, now onto the intended and unintended consequences of this bumper sticker bill.

Best case scenario if this Democrat attention grabber of a bill becomes law is that Medicare proves unable to negotiate lower prices than the marketplace currently does--and two non-partisan entities, the Congressional Budget Office and the CMS Office of the Actuary have said the Democrat plan

yields no savings for this reason--and no harm is done. But worst case scenario is overactive bureaucrats or the next President take this negotiating authority and use it to force price controls, ration drugs, and deny doctor and patient choice of what medicines are allowed for seniors.

So friends, pick your poison: On the one hand an impotent outcome as CBO and the CMS Actuary have foretold, on the other, Medicare setting prices and rationing seniors their medicine. I will remain agnostic as to which is the intended and which the unintended consequence.

The reason the two economic models I've mentioned concluded no savings via H.R. 4 is that, fundamentally, the government cannot negotiate any better than the thousands of prescription drug plan managers in the private market. Under current law the millions of Medicare beneficiaries, via their prescription drug plans, are coupled with the 200 million other health insured Americans. Caremark negotiates for 70 million lives, Medco for 54 million, and Express-Scripts for 51 million. Medicare Part D allows our Medicare beneficiaries to piggyback on that huge buying power with professional negotiators. And the other side would rather untrained government bureaucrats negotiate for my constituents? No thank you.

So let's look at the worst case scenario under this bill, where Medicare commands and controls seniors' medicine.

Yes, H.R. 4 seems to disallow formularies, but in law school they taught me to look closely at the law. Page 3, line 20: ``nothing ..... shall be construed to authorize the Secretary to establish or require a particular formulary.'

But banning a national formulary does not protect beneficiaries from other government access controls to prescription drugs. For instance, the Medicaid program has no national formulary, however, it employs various strategies such as a ``preferred drugs list' to limit access of medications. If beneficiaries want to receive a medication that is not on the preferred drug list, they must go through a lengthy and confusing authorization.

If the authors of H.R. 4 didn't have this in mind, why did they strike the underlying MMA language that would seem to protect against this, that said ``The Secretary may not require a particular formulary or institute a price structure for the reimbursement of covered part D drugs'?

The Ways and Means Chairman was thoughtful enough to hold a forum on this matter yesterday for our committee members, and both his and Mr. McCrery's invited witnesses agreed that to get VA prices, you have to set a formulary, and a strict one at that.

Again, the Democrats' bumper sticker slogan is fraught with bad consequences--intended or unintended.

Most importantly, the plan offered by Democrats would limit choice. Veterans have access to less than one third the drugs Medicare beneficiaries do--the VA formulary covers 1,300 drugs while the Medicare drug benefit covers 4,300 drugs. Drugs like Lipitor, Celebrex, Flomax, and Prevacid are unavailable in the VA plan. In fact, 20 of the top 33 most commonly prescribed drugs for seniors are excluded in the VA plan.

Pharmacy access is another pitfall of the Democrats' slogan. In reality, the VA distributes 80 percent of its medications by mail. Medicare uses mail for less than 2 percent of its medications. Seniors appreciate the opportunity to talk to their local pharmacist and ask questions about their prescriptions, and we have 1,077 pharmacies in Missouri where they can do just that. The VA has 6 pharmacies in the entire state of Missouri (and only 332 nationwide); the Democrat bumper sticker slogan loses a lot of its luster when looked at through that lens.

Simply put--seniors would find many of their favorite drugs unavailable and that's unacceptable.

The price control plan offered by the Democrat majority does not guarantee that seniors have access to ``all or substantially all' drugs to treat cancer, mental illness, HIV/AIDS, and Lou Gehrig's disease. These important protections are in place in the current drug benefit and our motion to commit will offer the majority a chance to continue to protect drugs for these vulnerable populations.

While the plan being debated may be labeled ``price negotiation,' it is more accurate to call it ``price fixing.' Every time price fixing has been tried in other countries, it has failed. It has resulted in limited therapies and reduced innovation. And if the government saves the money from price fixing, the economic models show the cost will be shifted to the higher prices for the over 250 million non-Medicare Americans. In fact, the Democrat witness at yesterday's forum stated ``if Medicare gets a better price, some people will have to pay more.'

It's an easy campaign slogan to say ``let Medicare negotiate low prices like the VA.' But, to get there, you have to make that deal with the devil and allow Medicare to set prices and force strict formularies.

In conclusion, in attempting to fix an unbroken system, H.R. 4 faces the unintended consequence of either being lamely impotent at negotiating lower prices, or dangerously controlling by price fixing and restricting seniors access to drugs. Bad outcomes, whether intended or not; therefore, I urge a ``no' vote.

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