CMS Deals Rep. Davis a Surprise Blow Over Medicare Drug Negotiation

Posted March 7, 2007 at 4:24pm

Republican efforts to oppose Medicare drug-price negotiations have hit a snag, with the Centers for Medicare & Medicaid Services rebuffing a data request that Rep. Tom Davis (R-Va.) had hoped would support his argument against negotiation authority.

Speaker Nancy Pelosi (D-Calif.) and Oversight and Government Reform Chairman Henry Waxman (D-Calif.) have made direct negotiation — which supporters expect to drive down drug prices for consumers — one of their party’s top agenda items.

On Feb. 9, Waxman sent a letter to 12 Medicare insurers seeking drug pricing information. In turn, Davis also sought drug price negotiation information to prove that Medicare’s existing prescription drug plan already saves consumers money.

Davis asked the CMS for data, including Medicare drug plan profits, Medicare drug plan administrative costs, negotiated price discounts, rebates, and other price concessions obtained from drug manufacturers and pharmacies by Medicare drug plans. Davis also sought information about how these discounts, rebates, and other price concessions obtained by Medicare drug plans are passed on to beneficiaries.

The CMS, however, denied Davis’ request in a March 1 letter, arguing that providing this pricing data would undermine the very system that Davis supports.

“Public disclosure of negotiated price concessions will reduce the ability of pharmaceutical benefit managers and plans to negotiate significant discounts,” the acting head of CMS, Leslie Norwalk, said in a letter to Davis. “Public disclosure would result in higher prices being passed on to beneficiaries.”

The CMS’ rejection of Davis’ request leaves his staff scrambling to get information to support the argument against government negotiation. “We are disappointed in what we have so far — which is nothing,” a Davis aide said in an interview. The lawmaker will again ask the CMS to provide some information and is taking another look at the statutory requirements of the Medicare law to determine what kind of information the government must release, the aide added.

The CMS needs to provide some data about the effectiveness of negotiations under the prescription drug plan to allow Republicans like Davis to counter what will be a “fog of misinformation” from proponents of direct negotiation, the aide said.

Neither Pelosi’s or Waxman’s office returned a phone call.