Snowe-Wyden Amendment to Lift Negotiation Restrictions on Medicare

SNOWE-WYDEN AMENDMENT TO LIFT NEGOTIATION RESTRICTIONS ON MEDICARE

Mr. WYDEN. Mr. President, on this difficult evening, I wish to take just a few minutes to talk about the budget.

Last Congress, Senator Snowe and I, on a bipartisan basis, saw 51 Members of the Senate support our bipartisan legislation to lift the restriction on Medicare so that program could bargain to hold down the cost of medicine. That vote, where a majority of Senators went on record in supporting the effort to hold down the cost of medicine, took place before the program went into effect. It seems to me everything that has happened over the last few months, since a majority of the Senate voted for our bipartisan amendment, supports our case for passing that legislation now.

We will be offering our bipartisan proposal, the Snowe-Wyden amendment, later this week, and I wish to take just a few minutes to outline why it is so important.

The American Association of Retired Persons says it all in a letter endorsing our bipartisan Snowe-Wyden proposal. I ask unanimous consent that the AARP letter endorsing the Snowe-Wyden legislation be printed in the RECORD.

There being no objection, the material was ordered to be printed in the Record, as follows:

AARP,

March 13, 2006.
Hon. RON WYDEN,
U.S. Senate,
Washington, DC.

DEAR SENATOR WYDEN: AARP supports your amendment to the Senate fiscal year 2007 budget bill to provide for the ability of the Secretary of Health and Human Services to participate in negotiations with pharmaceutical manufacturers under the Medicare prescription drug program.

Prescription drug prices continue to rise much faster than the rate of inflation. AARP's latest Rx Watchdog report released in February 2006 found that prices for nearly 200 of the brand name medications most commonly used by older Americans rose 6.0 percent during the 12 month period from October 2004-September 2005. At the same time, the rate of general inflation was 3.3 percent. These drug price increases particularly hit older Americans, who use prescription drugs more than any other segment of the U.S. population.

Millions of older and disabled Americans now have the opportunity to choose prescription drug coverage as part of their 2006 Medicare benefit options. To date, millions of Medicare beneficiaries have enrolled in the program and as a result are realizing savings on their prescription drugs. However, improvements to the Medicare Modernization Act are necessary to strengthen the benefit and the Medicare program. We believe the first step is to keep the drug benefit affordable for beneficiaries as well as taxpayers.

While we have seen that the current competitive structure existing in the MMA has helped to bring prescription drug prices down, we believe that giving the Secretary the authority to participate in negotiations may also help to make prescription drugs more affordable for Medicare beneficiaries.

We look forward to working with you and your colleagues on both sides of the aisle to ensure that the new Medicare Part D benefit remains affordable over time. If you have any further questions, please feel free to contact me, or have your staff contact Anna Schwamlein of our Federal Affairs staff at 202-434-3770.

Sincerely,
David P. Sloane,

Sr. Managing Director,
Government Relations and Advocacy.

Mr. WYDEN. Mr. President, as AARP notes--and they publish an Rx Watchdog report--they have noted that for the nearly 200 brand-name medications most commonly used by older people, the costs of those medicines have gone up twice the rate of inflation. So all Americans get hit by prescription drug costs. Particularly hard hit are older people, and low-income older people, and people with very big prescription drug bills. As noted by AARP, these seniors are hit more than any other segment of the U.S. population by prescription drug costs.

At a time when the costs of this program and the costs of Government have gone through the stratosphere, one would think the Government would be doing everything possible to hold down costs. Yet, unfortunately, in the original prescription drug legislation, a bizarre restriction was put in place that literally bars the Government from being a smart shopper. Everybody else in this country tries to use their clout in the marketplace to get the best possible deal, but not Medicare--not Medicare, which offers a benefit to more than 30 million older people. They are not using the opportunity to go into the marketplace and hold down the costs.

I compare the Government's approach to buying prescription drugs under Medicare to somebody going into Costco and buying toilet paper one roll at a time. Nobody would shop that way. No savvy shopper would ever give up, even before they walked into the store, the opportunity to hold down the costs. But that is what Medicare is doing, and that is what Senator Snowe and I want to change.

Now, we have seen over the last couple of months older people and their families absolutely up in arms, up in arms about the frustrations of getting this prescription drug program out and usable in a commonsense kind of fashion. It is far too complicated. There are far too many alternatives. Some seniors say that even with a Ph.D. they can't sort it out. But what is especially troubling is at a time when the costs of the program continue to go up and up and up, the Government isn't even taking commonsense steps to hold down the cost of these medicines.

So what Senator Snowe and I have tried to do in a bipartisan effort for going on 3 years now is to make sure that when necessary the Secretary of Health and Human Services can negotiate for the best possible prices of prescription drugs for older people.

Now, this isn't price control. Specifically, our bipartisan amendment stipulates that the authority granted here cannot be used to set prices or to set a uniform formulary. Nowhere in this amendment is there a call for price controls or anything that can be interpreted as price controls. This is about using marketplace forces. This is about using the market just as millions of Americans do every day to hold down the cost of medicine.

Senator Snowe and I believe one of the most flagrant mistakes in the Medicare law--and both of us voted for that legislation--was to write into law that the Secretary could not have bargaining power under any circumstances at all. We have seen drug prices increase, as AARP has noted, far higher than the rate of inflation. The Wall Street Journal has reported price spikes. The Congressional Budget Office has indicated there can be savings from negotiations in the area of single-source drugs that do not face competition, and suffice it to say, many of the single-source drugs are ones that are commonly used by Medicare patients, such as Lipitor and Zocor and Prevacid.

I will wrap up, Mr. President, with only a couple of additional points because I know my colleague from Washington has been very patient. The authority that Senator Snowe and I seek to grant to the Department of Health and Human Services is the authority that Secretary Thompson at his last press conference as head of the Department of Health and Human Services, said he wished he had. So the last head of that agency, at a time when they were moving to implement the prescription drug law, said specifically he wished he had had this authority.

The last point I would make, Mr. President, is that some have said: Well, seniors are seeing some savings already. If that is the case, we are glad to see it, but it comes about because the basic benefit covers 75 percent of the cost of the drug after the $250 deductible. So the question for the Senate is where are you going to look in order to hold down the cost of this program? Are you going to look at taxpayer subsidies? Are you going to look at marketplace forces? Senator Snowe and I believe that at a time when the costs of Government are soaring and the costs of this prescription drug benefit are soaring, we ought to use commonsense marketplace principles to hold down the cost of medicine, not continue to rely on taxpayer subsidies, and that is what our amendment is all about.

Mr. President and colleagues, I do not know of a single private sector entity, whether it is a timber company in my home State of Oregon, or a big auto company in the Midwest, that when they are buying something in bulk, say: What about the possibility of some discounts? So why shouldn't Medicare ask that question, just to have that authority so as to make marketplace forces work? Why wouldn't we want to assure that there is every possible tool to help seniors hold down the costs of medicine?

We will debate this at greater length in the course of the week. As I noted, Senator Snowe and I received 51 votes, a majority of the Senate, for this legislation before the program went into effect. I would just say to our colleagues tonight, everything that has happened in the last few months suggests that there is an even better case for the bipartisan Snowe-Wyden amendment to hold down the costs of medicine.

Mr. President, with that I yield the floor.

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