May 22,2019

Grassley On Medicare Part D Price Negotiation

NOTE: Grassley sent a letter to the Congressional Budget Office seeking information about proposals to allow Medicare Part D to negotiate pricing. The Congressional Budget Office sent a response which can be found here. 

Prepared Floor Remarks by U.S. Senator Chuck Grassley of Iowa

Chairman, Senate Finance Committee

On Medicare Part D Price Negotiation

Wednesday, May 22, 2019



I come to the floor today to set the record straight on an issue that affects every American who is eligible for Medicare.

More specifically, I’m here to talk about our efforts to reduce the rising cost of prescription medicine.

Prescription drugs save lives. Millions of Americans, like myself, woke up this morning and took their daily medication

But there’s something that’s become a tough pill to swallow for an increasing number of Americans.

And that is paying for the rising costs of their prescription drugs.

I applaud President Trump for turning up the volume on this issue last summer.

That’s when he announced his administration’s blueprint to lower drug costs for all Americans.

It’s a goal that has widespread support.

That includes Republicans and Democrats as well as urban and rural Americans.

There are many good ideas to build upon that share broad, bipartisan bicameral support.

There is one policy out there, however, that I don’t agree with.

That is repealing the non-interference clause in Medicare Part D.

Let me explain why Congress kept the government out of the business of negotiating drug prices in the Medicare program.

Some 16 years ago, I was a principle architect of the Medicare Part D program.

For the first time ever, Congress in 2003 added an outpatient prescription drug benefit to the Medicare program.

Adding a prescription drug benefit for seniors was the right thing to do.

But it needed to be done in the right way-right for seniors and right for the American taxpayer.

By that, I mean allowing the forces of free enterprise and competition to drive costs down and drive value up.

For the first time ever, Medicare recipients in every state had the voluntary decision to choose a prescription drug plan that fit their pocketbooks and their health care needs.

The Part D program has worked.

Beneficiary enrollment and satisfaction are robust.

The Part D marketplace offers consumers better choice, better coverage and better value.

And yet, here we are again. It’s been 13 years since Part D was implemented.

And once again, I am hearing the same calls to put the government in the driver’s seat.

It’s the same back seat drivers who think centralized government knows best.

As the Senator who once again chairs the committee with jurisdiction over Medicare policy, I’m not going to let Congress unravel what’s right about Medicare Part D.

Remember, I was a Republican leading the charge to add a new benefit to a government program.

You heard me correctly. I was a Republican chairman working with my Democratic Ranking Member, Max Baucus.

We negotiated an agreement to add prescription drug coverage for seniors.

For me and other Republicans, namely, President George W. Bush, there were a few key caveats.

First, it must be voluntary.

Second, beneficiaries would share the cost with the taxpayer.

Having skin in the game keeps check on spending and utilization.

Third, we must allow competition – not government mandates – to drive innovation, curb costs, expand coverage and improve outcomes.

It wouldn’t work if the federal government interfered with the delivery of medicine and dictated which drugs would and would not be covered.

That’s why we wrote a non-interference clause in the law.

And my friend Senator Wyden, the current Democratic Ranking Member of the Finance Committee, voted for final passage in 2003.

The non-interference provision expressly prohibits Medicare from:

One, negotiating drug prices; two, setting drug prices and three, establishing a one-size-fits-all list of covered drugs.

That list is called a formulary.

I remember that many of my friends on the other side of the aisle voted for this policy. And yet, many are now pushing for a repeal of this provision.

Many Democrat leaders supported banning Medicare from negotiating drug prices: Senators Biden, Kennedy, Baucus, Reid, Schumer, Leahy, Durbin, Stabenow, Cantwell. On the other side of the Capitol, the list includes Speaker Pelosi and Chairman of the Ways and Means Committee, Chairman Neal.

There’s something else I’ve learned in all my years talking health care policy with Iowans at my annual 99 county meetings.

At the end of the day, Iowans don’t want the government prescribing life-saving medications.

They want to make those decisions with the physician who is treating them.

Last year 43 million out of 60 million Medicare recipients were enrolled in a Medicare Part D plan.

That’s the vast majority of Medicare beneficiaries nationwide that don’t have coverage through a past employer or similar coverage for another source.

Plan sponsors design different plan choices and compete for beneficiaries based on what those plans cover and what they cost.

Beneficiaries can pick from many options, with over three thousand plans offered across 34 geographic areas.

Most beneficiaries were covered by a prescription drug plan, a growing number were covered by a Medicare Advantage prescription drug plan.

The Part D base premium amount is low and has remained stable over many years.

So, the non-interference clause ensures that plan sponsors create plan options that respond to what beneficiaries want.

The nonpartisan Congressional score keeper, the Congressional Budget Office has repeatedly stated that repealing non-interference wouldn’t save money unless there was a restrictive formulary.

Last week, CBO sent me a letter stating the same thing.

I’d like to submit the letter for the record.

Repealing noninterference means a restrictive formulary which places limits on the drugs that are available to seniors.

I don’t believe Medicare beneficiaries want that.

As policymakers, we must keep in mind we are making decisions that affect health care choices for the people we are elected to represent.

Let’s all remember to first, do no harm.

Repealing the non-interference clause may sound good, but not even a spoonful of sugar will help a bad dose of policy medicine go down.

I hope this puts the issue to rest.

Part D has been a great success.

We need to preserve the foundation of private enterprise on which Part D is based and get to the real work of reducing prescription drug costs.