CBO still thinks negotiation remedy won’t work

April 18th, 2007 – 3:00 PM by D.J. Tice

tice.jpgThe Congressional Budget Office continues to believe that much ballyhooed efforts to negotiate lower drug prices for seniors won’t work.

Both of Minnesota’s senators — Democrat Amy Klobuchar and Republican Norm Coleman — supported an unsuccessful effort to bring the plan to a vote in the U.S. Senate today.

But in this report, delivered to the Senate last Friday, CBO says the Senate version of the Medicare Prescription Drug Price Negotiation Act of 2007 will, like its House counterpart, do little or nothing to reduce drug prices overall. 

The problem, CBO reports, is the same as with the House bill. The legislation prevents Medicare from establishing a restrictive formulary of preferred drugs. Without that, CBO says, the program will have no leverage beyond that possessed by individual prescription drug plans serving the program now.


11 Responses to "CBO still thinks negotiation remedy won’t work"

john sherman says:

April 18th, 2007 at 3:11 pm

How come the VA has much lower drug costs?

bsimon says:

April 18th, 2007 at 4:09 pm

VA, like most hospitals, has a formulary. Why medicare doesn’t is unclear.

Grace Kelly says:

April 18th, 2007 at 5:12 pm

OK, my comments on this topic are going the SPAMBOT.

Grace Kelly says:

April 18th, 2007 at 5:13 pm

The formulary is a distraction. Obviously the bill would work or else the incredibly strong arm of the ph$armacy lobby would not be fighting this bill. Actually,AARP reports from a poll that nearly 90 percent of voting-age Americans believes Med$icare should have the power to bargain for lower dr$ug costs. Every poll shows incredibly high support. In a Democracy the Senate vote would represent the people and that high support. It is not. The senate is representing ph$armacy companies. It is nice to know on this vote that Minnesota senators represented Minnesota!

editor25 says:

April 19th, 2007 at 7:08 am

Funny, negotiation works for the VA. Are you aware that $8 billion was given to the insurance and drug companies to induce them to offer these drug programs? And that prices for the top 15 drugs used by seniors reportedly rose an average of 9.2 percent over the past year?

Justin C. Adams says:

April 19th, 2007 at 9:45 am

Just because consumers won’t save money doesn’t mean that it won’t cost these companies money.

Regulation and oversight is costly for businesses. Even a flaming liberal like me can see that this is true. The executives in big pha-rma probably have ideological opposition in addition to any practical reasons they may have to the bill. That big phar-ma opposes the bill does not prove that bargining will save money for consumers.

Medicare needs a formulary. I’ve long been a supporter of collective bargining power, but the CBO typically does an exceptional job with its projections in comparison to other government offices which do this work.

All of that said, I’m pretty happy that our representation voted as it did. Clearly the public believes this problem with dr$ug costs needs to be addressed, and clearly they believe, rightly or wrongly, that the bargining power is an important component. I think rightly. In either event, since we’re not talking about something which damages the rights of a minority, the Senators should cast their votes in accordance with popular opinion.

At the same time, I would not be surprised to find out Coleman only decided his vote after discovering that the proposal would not pass regardless of his decision.

Similarly, if the CBO is right, we might fault our representation for supporting a bill which gives them political cover without actually making much difference in terms of outcomes.


April 19th, 2007 at 10:26 am

Justin, why do you worry about Norm’s vote? He could vote with the Democrats every time for the next year and a half and you still wouldn’t vote for him. I don’t know why Norm still tries to appease you leftists, it just doesn’t matter. In about a year, the DFL and the Star Tribune will engage in the largest charactor assignation on an imcumbant Senator we have ever seen.

john sherman says:

April 19th, 2007 at 11:32 am

Norm Coleman would vote with the Satanist Party if he thought it grease his political career.

I friend of mine used to tell a story about his grandfather, an old time power broker in Democratic politics in the Yakima Valley. One day a fresh young man came out to get old Festus’ blessing to run for county attorney, but the interview wasn’t going very well, so the guy ended his pitch by saying, “But sir, think of my principles.”

To which Festus replied, “Son, you ain’t got no more principles than a bastard tom-cat.”

When I think of Coleman, that story comes to mind.

bsimon says:

April 19th, 2007 at 12:50 pm

FreschFisch says
“In about a year, the DFL and the Star Tribune will engage in the largest charactor assignation on an imcumbant Senator we have ever seen.”

Sounds good to me; Senator Coleman could use a character assignment.

Greg says:

April 19th, 2007 at 1:26 pm

Either there will be a limitation on the drugs available or this law will have little effect on cost, as the CBO states. It is kind of like going to the used car lot and telling the salesman, “I’m buying this car regardless of price, now lets negotiate price.” You will probably not get the car below sticker. Since no politician is willing to say they want to limit the availability of drugs for Medicare patients this bill is really nothing more than political posturing.

swschrad says:

April 19th, 2007 at 2:28 pm

you are going to need a carrot and a stick. the stick is the formulary. the carrot is telling pharma companies that if they provide the best price/value, they get the business.

otherwise, the US continues to be, as long-ago congressman mark andrews (r-nd) said, “Uncle SAP” in the worldwide drug marketplace. pharma comes here and sells for whatever they darn well want, even if the same drug is ten bucks in norway or canada that costs 200 bucks here.

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