updated 4/11/2007 10:44:55 AM ET 2007-04-11T14:44:55

Democrats will soon renew efforts to let the government negotiate drug prices on behalf of Medicare participants.

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Senate Majority Leader Harry Reid, D-Nev., said Tuesday the Senate will turn its attention to the new drug benefit once it finishes with a bill that would loosen federal funding restrictions on stem cell research.

While prospects for the drug legislation are uncertain, it would require Republican senators to take a stand on government negotiations - a concept that has broad popular support.

The politics of volume
Currently, Medicare recipients who want subsidized coverage of their medicine enroll in private drug plans administered by insurers. The insurers negotiate how much they'll pay for the medicine their Medicare customers take. Those plans get a federal subsidy, plus consumers pay for a portion of the medicine.

But Democrats say the federal government could save money if it used its massive purchasing power to negotiate with pharmaceutical companies, much as it does for millions of veterans.

The chairman of the Senate Finance Committee, Sen. Max Baucus, D-Mont., scheduled a meeting for Thursday evening to consider the legislation.

"We're going to untie the secretary's hands to help seniors. When the market isnt providing fair prices for some drugs seniors need, there should be a way to strike better deals," Baucus said.

Veto threatened
Baucus's legislation stops short of what House lawmakers approved in January. The House bill requires the secretary of the Department of Health and Human Services to negotiate with drug companies. The Senate bill merely lifts a provision that bars him from doing so.

The Congressional Budget Office said Baucus's bill would have a "negligible effect on federal spending," the same assessment it gave to the House bill.

"The secretary would lack the leverage to negotiate prices ... that are more favorable that those obtained by (prescription drug plans) under current law," CBO Director Peter Orszag said in a letter to Baucus.

President Bush has already promised to veto the bill approved by the House.

The bill that Baucus is proposing will also give support agencies to Congress, such as CBO, access to the rebates and discounts that drug plans are negotiating with manufacturers. The agencies would use this data to inform Congress on how the drug plans are performing when it comes to lowering costs.

Also, the bill includes a provision that requires the Health and Human Services secretary to develop a list of research studies that would compare the effectiveness of drugs to competing drugs or medical devices. Drug plans would have to use the research in forming the list of drugs that they'll cover.

Such studies could lower the costs of the program for seniors and taxpayers, analysts say.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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