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HOUSE VOTE MARGIN AGAINST MEDICARE DRUG SUBSTITUTION SUGGESTS ISSUE COULD GET NEW LIFE IN CONFERENCE CMTE.: PRESIDENTIAL VETO THREATENED

Executive Summary

The House margin against Rep. Jacobs' (D-Ind.) generic substitution limitation amendment to Medicare drug benefits was 71 fewer than the vote adopting the overall catastrophic care legislative package. In the July 22 action on the House floor, the catastrophic plan passed by a 175 margin (302-127). However, the margin was narrower on the vote on the Jacobs amendment, with 265 members voting against and 161 voting for the measure. The Jacobs amendment would leave Medicare substitution to existing state requirements. The difference in the votes on the Jacobs amendment and the overall package suggests that the substitution limitation effort might still have life. The issue could come back for negotiation when the House and Senate go to conference on the bill. The 175-vote margin by which the legislation passed indicates strong support for some form of drug benefit under Mediare -- strong enough for the House to override a potential presidential veto of the bill. The Administration sent a July 21 letter to House Speaker Wright (D-Texas) to complain that the bill "is totally unacceptable." The letter was signed by HHS Secretary Bowen, Treasury Secretary Baker, Office of Management & Budget Director Miller, and Labor Secretary Brock, who said unless their concerns were "addressed in a satisfactory manner," they would "recommend to the President that he veto this bill." At a press conference called after the House passed the measure, Rep. Stark (D-Calif.), one of the sponsors of the bill, predicted that it would be "hard at this point" for Congress to delete a prescription drug provision from catastrophic care legislation. Stark noted that even a House Republican substitute measure would have extended outpatient prescription drug coverage to Medicare recipients. A Senate Medicare catastrophic coverage bill (S 1127) has passed the Finance Committee, but without a drug benefit. Legislators are working on a drug benefit to be added to S 1127 before it goes to the Senate floor. Due to cost concerns, proposals currently being floated in the Senate restrict prescription drug coverage to certain categories of patients or to pharmaceuticals for certain categories of diseases. Sen. Durenberger (R-Minn.) has suggested pharmaceutical coverage for Medicare recipients with low to moderate incomes. A plan proposed by Sen. Heinz (R-Pa.) would gradually phase in the drug benefit over a period of years ("The Pink Sheet" July 13, p. 4). As expected, the House Rules Committee gave the Democratic legislation a restrictive, "modified closed" rule for floor debate; only two amendments were offered: the Jacobs amendment and a Republican substitute. Jacobs, whose district includes Indianapolis and who has acknowledged that he offered his amendment at the request of Lilly, pointed out that the measure was adopted by the Ways & Means Committee and later changed by the House leadership. The amendment would not excise mandatory generic substitution, he said, but would allow physicians in each state to follow state procedures when deciding whether substitution is appropriate for individual patients. "The question is whether the physicians of this country, not being practitioners in interstate commerce but being about as local and state-bound as you can get, will have to march lockstep to the tune of an overriding federal regulation which would supplant the state law, thus making a dual regulation for each doctor in the country," Jacobs said. Rep. Stark argued that the only opponent of the bill's substitution rule is the brandname pharmaceutical industry -- "those manufacturers who hide under the protection of a patent." Although the firms say the federal substitution provision is a threat to R&D, Stark said, "there is not a one of them -- and the Eli Lilly Co. in particular -- who spends as much on research as they do on advertising." Stark added that Republican members who voiced concerns with the costs of the legislation could help contain costs by defeating the Jacobs amendment. Rep. Waxman (D-Calif.) argued that because the amendment would make generic substitution more difficult in many states, "it would raise Medicare premiums by nearly $450 mil." over the program's first four years "but the drug benefit would not be changed by one iota." A second amendment was a Republican substitute bill offered by House Minoirity Leader Michel (R-Ill.). The amendment, defeated by a margin of 190 votes for and 242 against, was based on a substitute measure developed by Rep. Madigan (R-Ill.) in the Energy & Commerce Committee and would have provided drug coverage through Medicaid only for Medicare beneficiaries with annual incomes of up to 150% of the proverty level. The alternative also included more moderate provisions for benefits such as home health care. The Republicans argued that their bill would be more affordable. Madigan maintained that the substitute amendment would result in total Medicare premiums of $936 per couple in 1992, whereas the Democratic plan would cost $2,908 per couple. Rep. Gregg (R-N.H.) declared that the Democratic plan would run up deficits totaling $21 bil. by 2005 and $58 bil. by 2010, according to projections by the Health Care Financing Administration. Immediately before the final vote on the bill, Rep. Crane (R-Ill.) offered a "motion to recommit." If adopted, the motion would have referred the legislation back to the Ways & Means Committee for reconsideration of the cost impact of AIDS patients who might receive Medicare coverage for Retrovir treatment. Ways & Means Committee Chairman Rostenkowski (D-Ill.) noted that the bill establishes a commission "to review the drug program" and that a cap requires that the Medicare drug program be cut back if premiums rise by 20%. "Such a report could include recommendations concerning AIDS benefits if the higher costs were the result of the payment for drugs for AIDS patients," Rostenkowski said. Stark noted during earlier debate that "fewer than 1% of AIDS patients live long enough to quality for Medicare." Reportedly, Democrats have resisted proposals to classify certain categories of beneficiaries as ineligible for coverage. As significant numbers of AIDS patients begin surviving longer and consume resources from the Medicare drug program, Democrats reportedly will then seek alternate sources of coverage for those patients. The House margin against Rep. Jacobs' (D-Ind.) generic substitution limitation amendment to Medicare drug benefits was 71 fewer than the vote adopting the overall catastrophic care legislative package.
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