Last week, after defeating about a dozen amendments, the Senate Finance Committee approved a bill that would allow, but not require, the administration to interfere in Medicare drug price negotiations between private drug plans and the pharmaceutical companies.
Chairman Max Baucus (D-Mont.) was criticized by members of his own party for offering what they said was a watered-down version of the bill that passed the House earlier this year to require HHS to negotiate Medicare drug prices.
But we should not be fooled by rhetoric. This would send us down the road to price controls and all of the attendant distortions they bring. And there is other mischief in the Senate bill, including requiring the disclosure of confidential Medicare price negotiation data, which would negate many of today?s deep discounts. It would also set us on the slippery slope of government involvement in directing that drugs offered in Medicare must be deemed "cost-effective."
One amendment that went down to defeat is particularly puzzling: Offered by Sen. Pat Roberts (R-Kan.), it would have restored language prohibiting government interference in drug price negotiations that was introduced in an earlier Congress by former Senate Democratic Leader Tom Daschle and cosponsored by 33 Senate Democrats. The Democratic majority on the committee in this Congress voted it down.
Senate Majority Leader Harry Reid (D-Nev.) says that the Baucus bill could come up for a vote on the Senate floor next week. If it gets 60 votes, it would go to conference with the House.
But Congress is in dangerous territory. Seniors want to be assured that the price-negotiation bill would fulfill two goals: 1) That it would in fact lead to cost savings; and 2) that it would not limit their choice of drugs.
This bill fails the test.
The Congressional Budget Office has said repeatedly that savings from the Baucus bill would be "negligible." That's because the only way that negotiations can work is through volume buying and the ability to walk away from a deal if the price is too high. If the government walks, the drug wouldn't be available.
Advocates of negotiation point to a 2006 Kaiser Family Foundation survey, which found that 85 percent of Americans support allowing the government to negotiate prescription drug prices for Medicare.
But support plummets when voters learn about trade-offs. Other surveys show that only 30 percent still support negotiation when they learn that it would mean they could choose only from a limited list of government-approved prescription drugs. And only 28 percent of seniors believe that government would do a better job of getting low drug prices than the competitive marketplace.
This is yet another example of the list of legislative initiatives in this new Congress that display hostility toward the private market. It may seem like a small step, but it would take us in precisely the wrong direction. It would move us toward giving the government — rather than the patient — control over healthcare decisions.
Grace-Marie Turner is president of the Galen Institute in Alexandria, Va., a non-profit research organization focusing on free-market solutions to health reform. She can be reached at email@example.com.