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GOP corporate allies in Congress's cross hairs

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But critics, including the White House and the Department of Health and Human Services, say that drug prices are already falling faster than expected under the 2003 law, and that mandating government to negotiate drug prices could limit the access to drugs for seniors.

Under the current prescription-drug bill, seniors are already saving an average of $1,200 a year on prescription drugs, according to the Centers for Medicare and Medicaid Services. And the cost to the Treasury is about $30 billion, instead of $43 billion as anticipated.

The conflict sets up one of the first big battles of the 110th Congress. Since 1990, drug companies have contributed more than $134 million to national candidates, more than two-thirds of that to Republicans, according to the Center for Responsive Politics. The industry doubled its political contributions in the run-up to the 2003 legislation.

"Critics would have you believe that there are no negotiations in how prices for medicine are set. That's simply not true," said Ken Johnson, PhRMA's senior vice president, in a statement after the November elections in anticipation of the Democrats' proposal. "The negotiations are occurring – as they should be – between prescription drug plans, several of which already purchase medicines on behalf of tens of millions of Americans, and pharmaceutical companies. That's the marketplace in action and that's how America's seniors will see true savings without compromising the search for future cures."

But despite broad public support for lifting a ban, Democrats are divided on how to proceed and have yet to release specifics of their proposal. Max Baucus (D) of Montana, incoming Senate Finance Chairman, opposed a bipartisan plan in the 109th Congress that would have required the Department of Health and Human Services to get involved in negotiations between private drug plans and drug companies in some cases. If House Democrats lift the ban, as expected, Senator Baucus says he will conduct hearings on its likely impact. Meanwhile, HHS Secretary Mike Leavitt has already signaled that if given the opportunity to negotiate lower drug prices, he would not exercise it.

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