The American Medical Association has adopted a new policy in support of allowing the HHS secretary to negotiate discounts with pharmaceutical manufacturers for the medications that will be covered under the new Medicare drug benefit in 2006, the New York Times reports. AMA, which is "often viewed as a conservative voice for organized medicine," had lobbied in a favor of the Medicare legislation, signed by President Bush in December, that makes it illegal for the government to "interfere" with negotiations with drug companies, the Times reports. The clause was added to prevent federal regulation of medication prices, Sen. Chuck Grassley (R-Iowa) said, according to the Times. The Bush administration and the Congressional Budget Office maintain that the private drug plans participating in the new Medicare drug benefit would be able to secure large discounts from drug manufacturers, and if the government were permitted to make such deals, the discounts would be comparable. According to CBO Director Douglas Holtz-Eakin, the HHS secretary "would not be able to negotiate prices that further reduce federal spending to a significant degree."

Other Federal Organizations Benefit from Negotiations
However, AMA officials noted that other federal agencies, such as Veterans Affairs and the Defense Department, have been able to "negotiat[e] favorable rates on prescription drugs on behalf of their beneficiaries, resulting in very substantial cost savings." AMA added that "others delivering medical services under federal health care programs, including physicians, have long been under government-imposed limits on their fees." According to the Times, some doctors and hospitals believe it would be an anomaly if prescription drugs were exempt from federally regulated payments as their own Medicare payments are. Further, they worry that a rapid increase in Medicare prescription drug spending could "create new pressure to hold down payments" to providers, the Times reports. House Minority Leader Nancy Pelosi (D-Calif.) said, "I'm pleased to have the AMA's support for negotiating lower prices and look forward to working with them on this issue. Their support will be a significant help" (Pear, New York Times, 10/17).