Letter on the "Medicare Fair Prescription Drug Price Act of 2007"

April 12, 2007

The Honorable Max Baucus
Chairman
Committee on Finance
United States Senate
Washington, DC 20510

The Honorable Charles Grassley
Ranking Member
Committee on Finance
United States Senate
Washington, DC 20510

Dear Chairman Baucus and Ranking Member Grassley:

The U.S. Chamber of Commerce, the world's largest business federation representing more than three million businesses and organizations of every size, sector, and region, urges you to oppose the Chairman's Mark, the "Medicare Fair Prescription Drug Price Act of 2007", to S.3, which removes the non-interference provision of the Medicare Modernization Act (MMA). Removing this critical language could dismantle a vastly popular market-driven program that maximizes access to the best medicines through competitively driven plans.

The MMA created the Medicare Prescription Drug Benefit, also known as "Part D," which took effect in 2006. Under the program, Medicare beneficiaries choose among competing private plans, selecting one that meets their needs, rather than being limited to a one-size-fits-all government plan. Nearly 24 million people who previously had no prescription drug coverage now have a range of options available. This includes 17.2 million beneficiaries enrolled in private prescription drug plans and another 6.7 million beneficiaries enrolled in Medicare Advantage prescription drug plans. More than 9 million seniors have their entire drug costs covered, with fewer restrictions than under Medicaid or the state programs on which they relied previously.

The non-interference provision prohibits the government from negotiating directly with manufacturers, pharmacies and prescription drug plan sponsors. Repeal of this provision would allow the Secretary of Health and Human Services to negotiate, giving him potential de facto control to set prices for prescription drugs. Such an outcome could inevitably increase the burden on employers and the private sector already buckling under the current health care costs. Although the Chairman's Mark does not require the Secretary to negotiate, a mandate to interfere could appear in subsequent amendments.

As this very popular program currently exists, pharmacy benefit managers, who currently provide drug coverage for 190 million Americans, negotiate drug prices while offering competing versions and multiple plan offerings to seniors. By providing choice and competition among private plans, Medicare beneficiaries are protected from government imposed price controls. Part D ensures that seniors and the disabled have choices and access to options when selecting the plan that best meet their medical needs.

Private plan providers well understand how to negotiate with manufacturers and pharmacies to achieve savings and do so for most Americans, including millions of employees covered by the Federal Employee Health Benefit Program. In the first year of its implementation, the Part D program has seen prescription drug plans' competitive bids more than 10% lower in 2007 than 2006—a significant savings to beneficiaries.

Ensuring robust competition in the overwhelmingly popular Medicare Part D program is among the Chamber's highest priorities for meeting the health care needs of retirees, employees and businesses across the country. Therefore, the Chamber urges you to support employers and Medicare beneficiaries by opposing the Medicare Fair Prescription Drug Price Act of 2007.

Sincerely,

R. Bruce Josten

Cc: Members of Committee on Finance