Senate panel approves Medicare drug price bill

[CMF Newsman]

WASHINGTON (Reuters) - The U.S. Senate Finance Committee on Thursday approved a bill that would permit the government to negotiate for Medicare prescription drug prices, throwing down a challenge to the powerful drug industry.

Moved forward by the committee on a 13-8 vote, the bill is expected to go next week to the full Senate, where debate is likely to be intense, Senate aides said.

The House of Representatives in January passed a tougher version of the bill. President George W. Bush has vowed to veto the House bill. It would require, not just permit, direct negotiation over prices by the government with drug companies.

Medicare is a national health insurance program that covers more than 40 million elderly and disabled Americans. It was expanded last year to add a prescription drug benefit. Coverage is managed for Medicare by dozens of private companies.

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[daworm]

Who has leverage over whom? The government can say "We won't pay for these drugs with Medicare dollars if you don't sell them at price X." The drug company can say "We won't sell the drugs at all unless we get price Y." Price Y will be higher than price X. The government can't force the companies to produce the drugs, and the drug companies would be foolish to produce the drugs knowing they would lose money on them. I think the drug companies are in the position of power here, and if the government tries to force the issue, we'll see a lot of Medicare recipients who simply will not be able to get the medications they need.