Tammy Baldwin: Federal government prohibited 'from negotiating lower prescription drug prices'

In the heat of her historic run for the U.S. Senate in 2012, Wisconsin Democrat Tammy Baldwin traded charges with Republican rival Tommy Thompson over prescription drug prices for senior citizens who are on Medicare.

After defeating the former governor to become the nation’s first openly gay U.S. senator, Baldwin largely scaled back her public statements. But in recent months, as a 2018 re-election campaign looms, she has returned to being more vocal.

With potential GOP challengers lining up, Baldwin revisited the Medicare issue on Jan. 5, 2017, declaring on Twitter:

"We have a broken system in D.C. that prohibits the fed gov from negotiating lower Rx drug prices for our senior citizens. Let’s change it."

The tweet clearly alluded to Medicare, in that it was accompanied by a graphic that referred to legislation known as the Medicare Prescription Drug Price Negotiation Act.

So, is a behemoth like the federal government not allowed to use its leverage to attempt to negotiate lower prescription drug prices in Medicare?

And while we’re asking: What impact would such negotiation power have?

Part D

Medicare Part D is a voluntary insurance program for prescription drugs for people on Medicare proposed by Republican President George W. Bush. It became law in 2003 and has been in place since 2006. Private insurance companies offer a variety of plans subsidized by the government, and beneficiaries get to choose the plan that's best for them. In 2016, nearly 41 million Medicare beneficiaries were enrolled in Part D.

Democrats have complained that Part D was a huge giveaway for the pharmaceutical industry because, although the insurance plans can negotiate prices with drug makers, the government cannot. President Barack Obama vowed to change the program to allow Medicare to negotiate lower prices, but then backed away from the pledge during negotiations over his Affordable Care Act, earning a Promise Broken on PolitiFact National’s Obameter.

Three 2016 presidential candidates -- Republican Donald Trump and Democrats Hillary Clinton and Bernie Sanders -- supported federal negotiation. And in January 2017, Baldwin and other Democratic senators introduced a bill to allow negotiation. So, the issue is back in play.

During the Baldwin-Thompson race, we rated True a claim by Baldwin that federal law prohibits the government from negotiating for "better prices" in Medicare Part D.

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That law remains in place.

So, what impact would federal negotiation have? Views vary.

Lower prices? Fewer drugs?

The current law says that "in order to promote competition," the health and human services (HHS) secretary "may not interfere with the negotiations between drug manufacturers and pharmacies and prescription drug plans."

• Jack Hoadley, a public policy professor at Georgetown University, told us the federal government might have more leverage than individual insurance plans to negotiate lower prices, if it were allowed. A 2015 federal report found that Medicaid, for example, has negotiated larger rebates from drug manufacturers -- which reduce drug costs to the government and to senior citizens -- than the private plans in Medicare Part D "by a substantial margin."

• In contrast, American Enterprise Institute health care and retirement policy scholar Joseph Antos told us that if the government negotiated for lower prices in Part D, "there will be an attempt to push up prices paid by everyone else." Grace-Marie Turner, president of the pro-free market health reform Galen Institute, said federal negotiation would really mean "price controls" that might would discourage drug makers from investing in research that produces new drugs.

The nonprofit Kaiser Family Foundation summarizes it this way:

Proponents believe that giving the secretary of HHS the authority to negotiate drug prices on behalf of millions of Medicare beneficiaries would provide the leverage needed to lower drug costs, particularly for high-priced drugs for which there is no competition and where private plans may be less able to negotiate lower prices.

Opponents believe the secretary would not be able to get a better deal than private plans already do and that plans have greater leverage with drug companies because of their whole line of business, but, if the secretary were able to negotiate lower prices, pharmaceutical companies would reduce their investment in pharmaceutical research and development.

Our rating

Baldwin says the federal government is prohibited "from negotiating lower prescription drug prices for our senior citizens."

Her reference is to Medicare Part D, a voluntary insurance program for prescription drugs for people on Medicare. Views differ on whether seniors ultimately would benefit if the federal government could negotiate directly with pharmaceutical companies on prescription drug prices for Part D. But current federal law does prohibit that.

We rate Baldwin’s statement True.

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The federal government is prohibited "from negotiating lower prescription drug prices for our senior citizens."

Tammy Baldwin

U.S. senator, D-Wis.

In a tweet

Thursday, January 5, 2017

-01/-05/2017

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