On the Senate floor Friday, lawmakers were to debate whether companies should be allowed to buy drugs in Canada and other nations where they cost less, then resell them here.
A 94-1 vote attached the generic drug measure to the Medicare prescription drug bill moving through Congress, where approval in the House and Senate was expected by the end of next week.
"This is a very good day for consumers," Sen. Charles Schumer, D-N.Y., said after the generic drug provision was added Thursday.
As the Senate wrapped up its first week of Medicare debate, a block of conservatives was lobbying to boost support for private companies. They see private insurance as the future of Medicare in delivering both drugs and routine health care.
Fearful that seniors would stay away from new managed care options being created by the bill, they want to pay private companies more, hoping the benefits would be good enough to attract a significant number of the elderly. They also released a letter to President Bush from 27 Republican senators asking him to help them make their case to GOP congressional leaders.
In the House, the second of two committees approved its version of a Medicare bill, defeating a series of Democratic amendments aimed at sweetening the benefits and reshaping the program. Approval by the House Energy and Commerce Committee, on a near partyline 29-20 vote, sent the bill to the House floor for debate next week.
Senators also were considering an amendment by Sens. Blanche Lincoln, D-Ark., and Kent Conrad, D-N.D., that would direct the government to offer a prescription drug plan for at least two years in areas where private companies show little interest. It's needed, they said, to add stability to the program.
"Our seniors could be forced in and out of plans, whipsawed from one plan to another, year after year," Conrad said.
The $400 billion, 10-year Medicare plan would, for the first time, give all seniors federal subsidies to buy prescription drugs, relying principally on private companies to deliver the benefit. It also would create a new Medicare managed care option — preferred provider organizations — which supporters hope would give seniors more choice while saving the government money.
At issue, though, is how much money the government will have to pay PPOs to attract seniors. The Congressional Budget Office estimated that, as written, the bill would attract just 2 percent of seniors into PPOs, though other estimates put it higher.
At a stormy closed-door meeting Thursday, Republicans led by Sen. Jon Kyl of Arizona demanded more money for PPOs. They want payments to be based on competitive bidding by the insurance companies, not on the normal price of caring for a Medicare enrollee.
Some Democrats expressed concern, though, raising the prospect that a major change could undermine the bipartisan backing the bill enjoys.
Senate Majority Leader Bill Frist, R-Tenn., said he was well aware of the tension and was trying to walk a careful line. "I'm going to do my best not to let it be an extreme bill to the left or to the right," he said.
Frist had $12 billion not yet allocated to help solve this problem and one other: how to keep employers from dropping coverage for their retirees once the Medicare benefit kicks in.
The controversy set off a series of daylong meetings involving key lawmakers and HHS Secretary Tommy Thompson, officials said. At day's end, Frist said he hoped for a compromise that would give Kyl and conservatives their way, but only after a delay of four or five years.
Despite continued grumbling, the legislation appeared on track toward passage. The popular generic drug provision is "another engine on the train," said Sen. Judd Gregg, R-N.H.
The generic drug provision essentially codifies regulations issued by the Food and Drug Administration last week to make it more difficult for brand-name companies to block generic competition.
The provision also is designed to penalize generic drug companies if they enter deals in which brand-name competitors pay them to delay bringing the lower-cost alternative to market.
By Laura Meckler