The Bush administration yesterday fired back at Democrats who said this week that allowing Medicare to negotiate drug prices would lead to substantial government savings.
The administration released a letter from the chief actuary for the Centers for Medicare and Medicaid Services (CMS) to CMS Administrator Mark McClellan to rebut the Democrats' claims.
In the letter, Rick Foster wrote: "We believe that direct price negotiation by the secretary would be unlikely to achieve prescription drug discounts of greater magnitude than those negotiated by Medicare prescription drug plans."
In a teleconference with reporters, Foster said there are several reasons in support of his conclusion, including unsuccessful attempts made in the past by federal administrators to negotiate drug prices for drugs covered in Part B of Medicare. In addition, Foster argued that Medicare prescription-drug plans will have strong incentives to negotiate price reductions and that pharmacy benefit managers have "demonstrated their effectiveness for many years."
McClellan said the letter had been written in response to a number of questions he and his staff had passed on to the actuary last week. "The letter makes clear that additional negotiating authority is unlikely to lead to additional savings," McClellan said.
When questioned about the assertion made Tuesday by Rep. Henry Waxman (D-Calif.) and Sen. Edward Kennedy (D-Mass.) that allowing the federal government to negotiate prices could save taxpayers $190 billion, McClellan was curt. "We need serious numbers," he said. "I have no idea where those estimates came from. We are only 10 months away [from the drug benefit's going into effect], and we need to be looking at approaches that will work."
The $190 billion figure did not come from the Congressional Budget Office, whose numbers Congress must use when passing legislation. Kennedy spokesman Melissa Wagoner said the figure came from Waxman's staff and Democrats on the Health, Education, Labor and Pensions Committee.