PhRMA pushes back against calls for Part D price negotiation

The powerful pharmaceutical lobby is pushing back against campaign-trail calls to allow Medicare to negotiate drug prices on behalf of millions of seniors enrolled in Part D.

The Pharmaceutical Research and Manufacturers of America (PhRMA) argues that price negotiations are already being undertaken by insurance companies and pharmacy benefit managers, bringing Part D costs down well below the program's initial projections.

"That’s the marketplace in action and that’s how America’s seniors will see true savings without compromising the search for future cures," Wes Metheny, PhRMA senior vice president, said Tuesday in a statement.

In August, Medicare officials provided evidence for those claims, announcing that average monthly premiums for Part D beneficiaries will be roughly $30 next year — about $1 more than the average rate in 2010.

More recently, though, Avalere Health came up with significantly different numbers. The Washington-based policy group found that the average premium under the drug benefit will jump by 9.5 percent in 2011 — largely due to cost spikes expected in the enhanced-plan market.

Part D is emerging as a prominent campaign issue in some races. In Kentucky, for instance, state Attorney General Jack Conway has made Medicare negotiation a central message in his race to replace outgoing Sen. Jim Bunning (R-Ky.). He argued this week that empowering Medicare to negotiate drug prices — much like the Veterans Health Administration does today — would save taxpayers tens of billions of dollars each year. 

"We need to make certain that Medicare can engage in bulk purchasing," Conway said Monday.

But PhRMA warns that the VA's savings results only because the agency limits the number of drugs available to beneficiaries — a message supported by the Congressional Budget Office.

"While we are committed to making the Medicare prescription drug benefit even better, we remain opposed to restrictive policies that would reduce access of medicines to patients in need and undermine the program’s clear success," Metheny said.

Last fall, House Democrats included Part D negotiation in their healthcare reform bill, but Senate leaders — bound by an agreement with PhRMA — didn't follow suit. It was the Senate bill that ultimately became law.