White River Junction
The bill is intended to put “the federal government’s purchasing power to work to save seniors and the taxpayer money,” Welch, a Norwich resident, said in a news release earlier this month. “The fact that we continue to pay retail rates for wholesale purchases is ridiculous.”
That sentiment was echoed and amplified on Wednesday, when President-elect Donald Trump said at his news conference, according to a transcript published by the New York Times: “We’re the largest buyer of drugs in the world and yet we don’t bid properly and we’re going to start bidding and we’re going to save billions of dollars over a period of time.”
Welch welcomed that statement.
“It is quite significant that President-elect Trump identified prescription drugs as somewhere we can save money,” Welch said in an interview on Friday.
“It’s not a brilliant insight, but a powerful insight,” he added.
Welch estimated that his measure would save taxpayers $156 billion over 10 years. The bill would end a prohibition on price-bargaining by federal officials that was included in the 2003 law that expanded Medicare to include a Part D that provides pharmaceutical benefits.
However, a 2004 study by the Congressional Budget Office concluded that unless Medicare created a new formulary, or list of covered drugs, that excluded certain expensive pharmaceuticals the agency’s role as negotiator would likely have “a negligible effect on federal spending.”
Welch disagreed. “If you price negotiate, you are going to get a better price,” he said.
Formulary changes would also yield savings, he added: “There is a variety of factors (that promote) pharmaceutical profits over affordability.”
Part D took effect in 2006 and currently provides coverage to 41 million seniors, according to the Kaiser Family Foundation, a nonprofit organization that studies health policy.
Under Part D, participants choose coverage from private insurance companies that compete by offering consumers different prices and levels of coverage for various drugs. For example, in Vermont 10 insurance companies offer 19 different plans.
For one 66-year-old man, the annual premiums for the Vermont plans ranged from just over $200 to about $1,500. Estimated out-of-pocket costs also vary widely.
The prices of drugs covered by Medicare are currently the product of negotiations between drug companies and pharmacies, on the one hand, and each participating insurance company. Pharmaceutical Research and Manufacturers of America, the drug industry lobbying organization, in a 2005 news release defended that approach as a “competitive structure that allows for private negotiations and substantial rebates.”
By comparison, under Medicaid, which insures some low-income Americans, and health care from the Department of Veterans Affairs, drug prices are limited by legislation and overseen by government agencies.
Welch cited a 2007 report by a consumer advocacy group that estimated that the prices paid by five large Medicare insurers for 20 common prescription drugs were 58 percent higher than the prices paid for the same drugs by the VA.
Medicare accounted for 29 percent of the nation’s prescription drug spending in 2014, and per capita costs for participants in Part D are expected to rise at an annual rate of 6.5 percent over the next decade, according to a February report from Kaiser.
Drug prices increased at an annual rate of 1.5 percent over the past years, but a recent surge was driven by spending on new treatments for hepatitis C and by a slowdown in the introduction of lower-priced generic drugs, Kaiser said.
Proposals to rein in Medicare drug spending have polled well — 93 percent of Democrats and 74 percent of Republicans voiced their support in a recent Kaiser poll — but vary in specifics. Some call for the establishment of a public drug plan, with prices negotiated by Medicare managers, that would compete with private insurance. Some would require the feds to negotiate the prices of certain high-priced drugs. Others would merely open the door for the Secretary of Health and Human Services to join the negotiating process.
U.S. Rep. Tom Price, the Georgia Republican whom Trump has nominated to be HHS secretary, voted against a 2007 bill that proposed to mandate drug price negotiation by Medicare, according to the ontheissues.org, a nonpartisan voter information website based in Cambridge, Mass.
But Bill Aimi, owner of the Corner Drug Co. in White River Junction, said that despite his reluctance to see government regulation expand, he supported the idea of Medicare negotiating drug prices. “In general, it would probably be good for the consumer,” he said.
Joe Noonburg, a Quechee resident covered by Medicare, paused in the face of a chill wind outside the CVS in West Lebanon, to briefly express his support. “I think it’s a good idea,” he said, especially if Welch is promoting it.
Welch’s bill, which has 17 co-sponsors, was introduced on Jan. 4 and referred to the House Ways and Means and Energy and Commerce committees. All of the co-sponsors are Democrats.
But Welch expressed hope that the new attention from the president-elect could draw support from across the aisle. “Trump has given us an opening to (make) progress on this issue,” Welch said. Specifically, he added, it could “give room to some of our Republican colleagues to join us in the effort.”
Welch flippantly acknowledged that he hadn’t been “invited to Trump Tower yet,” but said he had spoken one-on-one with some Republicans. He said his goal is to find someone to co-sponsor this or a similar piece of legislation, and that within a couple of weeks it should be apparent if this is possible.
Also on Friday, Welch showed that he had more than olive branches in his quiver. In a speech on the floor of the House, he called out Republicans for moving ahead toward repeal of the 2010 Affordable Care Act despite not having plans for something to take its place.
“You haven’t shown us a plan and here’s why,” Welch said. “Because when you put pen to paper, all hell is going to break loose on your side, because you have to move beyond the rhetoric to figuring out how you’re going to pay to keep our kids on our health care plan (and) how to pay if we’re going to let folks with pre-existing conditions have healthcare.”
Rick Jurgens can be reached at rjurgens@vnews.com or 603-727-3229.