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Public Statements

Medicare PRescription Drug Price Negotiation Act of 2007

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Date:
Location: Washington, DC


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

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Mr. PAUL. Mr. Speaker, H.R. 4 gives the Secretary of Health and Human Services the authority to engage in direct negotiations with pharmaceutical companies regarding the prices the companies will charge Medicare when the companies provide drugs through the Part D program. Contrary to the claims of its opponents, this bill does not interfere with a free market by giving the government new power to impose price controls. Before condemning this bill for creating ``price controls' or moving toward ``socialized medicine,' my colleagues should keep in mind that there is not, and cannot be, a free market price for a government-subsidized good.

Members concerned about preserving a free market in pharmaceuticals should have opposed the legislation creating Part D in 2003. It is odd to hear champions of the largest, and most expensive, federal entitlement program since the Great Society pose as defenders of the free market.

The result of subsidizing the demand for prescription drugs through Part D was to raise prices above what they would be in a free market. This was easily foreseeable to anyone who understands basic economics. Direct negotiation is a means of ensuring that the increase in demand does not unduly burden taxpayers and that, pharmaceutical companies, while adequately compensated, they do not obtain an excessive amount of Medicare funds.

The argument that direct negotiations will restrict Medicare beneficiaries' access to the prescription drugs of their choice assumes that the current Part D system gives seniors control over what pharmaceuticals they can use. However, under Part D, seniors must enroll in HMO-like entities that decide for them what drugs they can and cannot obtain. My district office staff has heard from numerous seniors who are unable to obtain their drugs of choice from their Part D providers. Mr. Speaker, I favor reforming Medicare to give seniors more control and choice in their health care, and, if H.R. 4 were a threat to this objective, I would oppose it.

Federal spending on Part D is expected to grow by $100 billion in 2007. It would be fiscally irresponsible for this Congress not to act to address those costs. I recognize that giving the Department of Health and Human Services the authority to engage in direct negotiations neither fixes the long-term problems with Medicare nor does empowers senior to control their own health care. However, we are not being given the opportunity to vote for a true pro-freedom, pro-senior alternative today. Instead, we are asked to choose between two flawed proposals--keeping Part D as it is or allowing the Department of Health and Human Services to negotiate prescription drug prices for the Part D program. Since I believe that direct negotiations will benefit taxpayers and Medicare beneficiaries by reducing the costs of prescription drugs, I intend to vote for this bill.

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