Will Obama admin impose price controls through Medicare drug benefit?

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The Obama administration publicly admitted defeat on price-fixing through the Medicare prescription drug benefit, but some worry they will push forward anyway.

The Centers for Medicare and Medicaid Services (CMS) proposed a rule change in January that would negate an extensive Senate battle over federal price-fixing. The Medicare Modernization Act of 2003 strictly bans the federal government from entering into negotiations amongst drugs manufacturers, pharmacies and prescription drug plan (PDP) sponsors, but the Obama administration has tried to assert these powers.

The Department of Health and Human Services (HHS), parent agency to CMS, “may not interfere with the negotiations between drug manufacturers and pharmacies and PDP [prescription drug plan] sponsors,” according to the statute. The Obama administration attempted to reinterpret this to allow interference between pharmacies and prescription drug plan sponsors, just not between drug manufacturers and either of the two remaining parties.

A legal opinion from Boyden Gray & Associates — the law firm of the former White House counsel under President George H.W. Bush — concluded that the rule was “not just bad policy,” but “unlawful” as well. After public outcry over the scheme, CMS backed off for 2014.

The House Energy and Commerce Committee warned CMS Thursday not to implement the rule after the election, requesting a host of documents and information about the agency’s plan.

Former Congressional Budget Office director Doug Holtz-Eakin believes the window is still wide open for CMS to pull an end-around with the rule change.

“They’re trying to do this through the back door again,” Holtz-Eakin told The Daily Caller News Foundation.

In January, CMS “sent out a call letter that assumed the rule would be enacted,” Holtz Eakin explained to TheDCNF. “One would think that they will pull the call letter back, and send out a revised one, but they still haven’t done so.”

Holtz-Eakin is worried that the agency, which administrates Medicare, Medicaid, and now the highly revised and reinterpreted Affordable Care Act, will continue its quest to insert itself into the prescription drug industry.

By failing to send out a revised call for proposals, the agency “leaves the lingering suspicion that while they’ve taken down the rule, they’re trying to get it through” under the radar, Holtz-Eakin told TheDCNF.

House Republicans agree. Energy and Commerce Committee Chairman Fred Upton and other GOP members sent a letter to CMS administrator Marilyn Tavenner Thursday questioning CMS’ action on the call letter.

“Given the agency’s failure to consider core concerns about the legal basis, policy rationale, and cost estimates CMS cited when proposing these policy changes, it would be unacceptable for the Administration to move forward with these changes, including directly or indirectly codifying such changes as part of the 2015 call letter,” the congressmen wrote.

The committee requested that CMS provide a list of documents within the next two weeks, including “a final rule or the agency’s 2015 call letter;” “cost estimates for the proposed rule,” and the agency’s legal rationale for the policy change.

CMS does not plan to fight for the ability to interfere in private negotiations for the remainder of this election year. But Holtz-Eakin said that’s no reason for seniors to feel secure.

“They didn’t shelve it, they delayed it. To me a battle was won but the war’s not over,” he told TheDCNF. “It’s just something that hurts seniors — it’s an election year and they don’t need that battle. But I’m worried about next year now.”

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