Welch says legislation could lower Medicare Part D costs

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(Host) The U.S. House has passed legislation to require the federal government to negotiate prices with pharmaceutical companies for the Medicare Part D drug program.

Congressman Peter Welch strongly supported the bill and says it could significantly lower costs for the Medicare program.

VPR’s Bob Kinzel reports:

(Kinzel) Welch says the legislation is needed because taxpayers are paying far too much money to support the Medicare Part D program.

In the last year, roughly 42 million seniors have signed up for the program which offers financial assistance for prescription drugs.

When the bill was passed in 2003, it prohibited the federal government from negotiating prices with the drug companies – instead it left this responsibility to the individual insurance companies that offer the policies.

This approach is in contrast with the operations of the Veterans Administration which does actively negotiate prices with the drug companies. In some cases, the cost of drugs through the V.A. is 80% lower than those charged for Medicare.

The V.A. has also lowered costs by implementing a preferred drug list but this new House bill doesn’t include a similar provision.

Welch says the legislation will lower costs to consumers and make it possible to expand coverage in the future:

(Welch) “I think if somebody goes in and buys a car and they don’t dicker to try and get a better price they’re losing money. I think that if a purchaser of a massive amount of prescription drugs doesn’t try to get some price advantage because they’re buying in bulk, they’re being reckless and irresponsible to the taxpayers who are paying for it.”

(Kinzel) The Pharmaceutical industry argues that the legislation is a form of price control and will restrict the ability of drug companies to invest in research. Welch doesn’t buy this argument and he says legislation passed in Vermont several years ago proves his point:

(Welch) “We worked with other states to do price negotiation – price negotiation is just getting the best price you can using the buying power that you represent to get a better price when you buy in bulk it’s straightforward capitalist economics So no, I totally and completely disagree with PHARMA and our Vermont experience puts us on solid footing so we know that’s bogus what they’re saying.”

(Kinzel) There are disputes concerning how much money will be saved under the legislation. House Democrats estimate the savings will be roughly $70 billion over a ten year period. But the Congressional Budget Office says the impact will be minimal unless a preferred drug list is adopted.

The legislation, which is part of the House Democrats 100 hour agenda, now goes to the Senate for its consideration.

President Bush has threatened to veto the bill if it reaches his desk. The House vote on Friday indicates that it will be very difficult for backers of the bill to override a presidential veto.

For Vermont Public Radio I’m Bob Kinzel in Montpelier

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