On January 12, during the first 100 hours of the 110th Congress, the House of Representatives will consider H.R. 4, a bill with 189 co-sponsors and the AARP's backing, that would require the Secretary of Health and Human Services, beginning in 2008, to negotiate with drug manufacturer "lower" prices for Medicare Part D covered drugs without using a formulary. (A private Medicare Part D plan sponsor would be permitted to attempt to negotiate even lower prices.) The bill's objective is lower the cost of the Medicare Part D program in order to close the so-called doughnut hole in Part D coverage.
The New York Times and the Washington Post published articles today describing the flaws in this approach as articulated by critics. The New York Times also reported that HHS announced yesterday a lower long term projection of Medicare Part D costs -- "In July, the Bush administration estimated that payments to private plans offering the Medicare drug benefit would total $1.077 trillion from 2007 to 2016. Officials now estimate they will be $964 billion." According to the Times report, CMS Acting Administrator Leslie Norwalk attributed the reduction to lower drug costs in general and lower enrollment as seniors found alternate drug coverage, such as employer sponsored coverage.
Sen. Max Baucus, who chairs the Senate Finance Committee, plans to hold hearings on the issue soon according to the Washington Times.