Price Negotiation Could Be Part Of Democrats' Part D Reform

With their gain of control of both houses of Congress, Democrats plan to move forward with a plan to allow the federal government to negotiate drug prices in the year-old Medicare Part D program, a change that could impact the substantial number of beneficiaries with mental illness.

During the run-up to the 2006 mid-term elections Democrats campaigned on a “ Six for '06' ” platform of legislative goals they wanted to achieve. One goal was to “fix” the Medicare drug program by having the federal government negotiate lower drug prices and “ending wasteful giveaways to drug companies and HMOs,” according to Democratic campaign literature.

In December congressional Democrats renewed their pledges to have the Department of Health and Human Services (HHS) negotiate directly with drug companies for reduced prices in Medicare Part D. Incoming House Speaker Nancy Pelosi (D-Calif.) went even further in mid-December when she said she would push legislation that would require—not just allow—HHS to negotiate directly with pharmaceutical companies on medication prices.

The Medicare drug benefit is administered through various private plans, some of which are freestanding prescription drug plans, such as AARP's, and others that are administered through HMOs and other kinds of managed care plans.

After the election handed Democrats control of both chambers of Congress, the Centers for Medicare and Medicaid Services (CMS) revealed that the cost of the Medicare prescription drug benefit would be about $30 billion in 2006, or 30 percent less than its previous estimate of $43 billion. The estimated long-term costs through 2015 also dropped to $729 billion from $926 billion. The drop, according to CMS, is due to lower-than-expected increases in prescription drug prices and the effect of competition among Part D plans.

In addition, some Part D plans say they will offer enhanced benefits in 2007, including elimination of cost sharing for generic medications.