PART D Rx PRICE NEGOTIATION PLAN CRITICIZED BY RESEARCHERS

Legislation requiring the federal government to negotiate with thepharmaceutical industry for lower Medicare Part D drug prices couldbackfire on the program, officials from the Centers for Medicare &Medicaid Services (CMS) warned Congress.

The bill, a key plank in this year's legislative agenda being pushedby congressional Democrats, would not generate any savings at all,testified actuaries from CMS. "Although the bill would require the secretary[of Health and Human Services] to negotiate with drug manufacturersregarding drug prices, the inability to drive market share viathe establishment of a formulary or the development of a preferredtier significantly undermines the effectiveness of this negotiation,"said Paul Spitalnic, director of the Parts C and D Actuarial Group in theOffice of the Actuary. "Manufacturers would have little to gain byoffering rebates that aren't linked to a preferred position of their products,and we assume that they will be unwilling to do so."

A separate report issued by researchers at the GovernmentAccountability Office stopped short of predicting failure. It did, however,raise questions about the feasibility of the plan.