updated 1/11/2007 8:07:38 PM ET 2007-01-12T01:07:38

President Bush vowed Thursday to veto Democratic-drafted legislation requiring the government to negotiate with drug companies for lower prices under Medicare.

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The House is to debate and vote Friday on the legislation, which is one of a handful of priority items for Democrats who gained control of Congress in last fall's elections.

"Government interference impedes competition, limits access to lifesaving drugs, reduces convenience for beneficiaries and ultimately increases costs to taxpayers, beneficiaries and all American citizens alike," the administration said in a written statement.

It said that competition already "is reducing prices to seniors, providing a wide range of choices and leading to a more productive environment for the development of new drugs."

Democrats shot back quickly.

"Evidently, the president is more concerned with protecting pharmaceutical company profits than American seniors," said Rep. Rahm Emanuel, D-Ill., a member of the House Democratic leadership.

Bush had already threatened to veto another of the top six bills Democrats are pushing across the House floor in the first two weeks of the new Congress. That measure, approved Thursday, would expand the extent to which federal funds could be used for embryonic stem cell research.

Several Democrats campaigned last fall as critics of the 1-year-old program that offers prescription drug coverage under Medicare, saying it tilted too heavily toward profits for the pharmaceutical and insurance industries.

Currently, private drug plans negotiate how much they'll pay for the medicine their customers take. The legislation would order the secretary of health and human services to step in.

Democratic setback
Democrats have said they would use the savings produced by the negotiations to reduce a coverage gap that is common in many plans.

But they suffered a significant setback on the issue on Wednesday when the nonpartisan Congressional Budget Office said the legislation was unlikely to result in lower prices.

"The secretary would be unable to negotiate prices across the broad range of covered Part D drugs that are more favorable than those obtained by (the plans) under current law," wrote Donald B. Marron, the CBO's acting director.

Actuaries for the Centers for Medicare and Medicaid agreed in their own estimate released during the day.

Republicans argue that individual insurance companies already negotiate lower prices on behalf of their customers and that the Democratic approach was tantamount to calling for federal price controls.

The legislation also would ban any attempt to limit the array of drugs available to Medicare beneficiaries by creating formularies. That stands in contrast to the Veterans Administration, which has lower prices for its beneficiaries but uses formularies that limit patient choice.

Public backs government role
Public polls show strong support for direct government intervention, and Democrats expressed confidence they had the votes to prevail.

But Republicans and their allies worked to undermine support for the measure.

The American Legion issued a statement criticizing the measure and predicting it would result in increased costs for those who buy drugs through the VA.

"Every time the federal government has enacted pharmaceutical price control legislation, the Department of Veterans Affairs (VA) experienced significant increases in its pharmaceutical costs as an unintended consequence," it said.

Under the Medicare prescription drug program, insurance companies offer competing coverage plans, and seniors may enroll in the one they like best. The administration announced Wednesday that 23.5 million seniors had enrolled in stand-alone plans as of Jan. 1.

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