In Kentucky, Senate hopeful slams Dems' deal with Big Pharma

The Senate Democratic candidate in Kentucky wants to rein in Medicare spending by allowing the government to negotiate prices directly with drug makers — a proposal rejected by Democrats as part of a healthcare reform deal cut with the pharmaceutical lobby last year.

State Attorney General Jack Conway (D), running to replace retiring GOP Sen. Jim Bunning, said the deal represented a missed opportunity to save taxpayers hundreds of billions of dollars.

"It made no sense to me, in talking about trying to achieve savings in Medicare, that a sweetheart deal was cut with the pharmaceutical companies," Conway said during a Monday night debate with GOP candidate Rand Paul. "The Medicaid system negotiates for lower prices. The VA system negotiates for lower prices. 

"If Medicare were allowed to do that … it would be $200 billion — that's 200 billion with a "B" — in savings. That's some real money."

When Congress created Medicare's prescription drug benefit in 2003, the law explicitly prohibited the government from negotiating with drug makers on behalf of the millions of seniors who would enroll in the program. 

The law also moved low-income seniors — those eligible for both Medicare and Medicaid — into Medicare drug plans. Previously, those "dual eligibles" got their drugs through state Medicaid programs, which are allowed to negotiate prices directly with pharmaceutical companies.

Those provisions brought the drug lobby behind the bill, but didn't come cheap for taxpayers. Indeed, a 2008 study from the House Oversight and Government Reform Committee found that the government currently pays about 30 percent more for dual eligibles’ drugs under Medicare than it would under Medicaid.

A more recent analysis from the National Committee to Preserve Social Security and Medicare found that allowing the government to negotiate Part D prices would save taxpayers $24 billion each year.

That didn't happen. Instead, in the early months of the healthcare reform debate, Senate Finance Committee Chairman Max Baucus (D-Mont.) reached a deal with the Pharmaceutical Research and Manufacturers of America (PhRMA) vowing not to allow government negotiation if the powerful lobbying group would support the bill. As part of the deal, PhRMA also agreed to put up $80 billion toward the cost of the bill over the next decade — most of that dedicated to closing Part D's coverage gap.  

Conway on Monday also pushed a plan to establish Medicare anti-fraud units in every state.

"I know from having Medicaid fraud units on the ground in each and every state that we're able to stay close and understand what's going on and ferret out fraud," he said. "The problem with Medicare is it's done from a big bureaucracy. I mean, put it in the AG's office or put it in some other office, but just have someone on the ground."