Senate Ag Committee Cuts $3 Billion in Ag Spending
Narrowly averting a tie vote over regional battles
on dairy subsidies, the Senate Agriculture Committee this week completed
its ag
program spending cuts to meet congressional budget rules, lopping $3
billion out of FY2005 USDA spending. The House has yet to confront
its budget cutting obligation to meet a five-year, $35-billion GOP
plan to cut spending.
Using budget maneuvers which moved some spending from
this fiscal year into the next, Senators avoided controversial proposed
cuts to
food stamps and nutrition programs. A move to drop the controversial
countercyclical dairy payment program out of the reconciliation package
failed. This program’s reauthorization pitted eastern and midwestern
dairymen against those in the West, and led to criticism last week
that by extending the Milk Income Loan Contract (MILC) program, crop
farmers and others were taking cuts that would have been half as deep
if the MILC program was out of the package.
The vote came down to Sen. Pat Roberts (R-KS), who
railed against the MILC program’s inclusion and its effect of
doubling farmer payment cuts. He said farmers are facing increased
costs of energy
for irrigation, fuel and fertilizer. However, to avoid allowing the
Senate Budget Committee to make the cuts in ag spending, Roberts reluctantly
voted with the chair, breaking a 10-10 tie vote.
The National Association of Wheat Growers’ (NAWG)
statement on the cuts reflected the sentiments of most major ag groups,
saying it was “dismayed” at the effect the cuts will have
in farm country. NAWG thanked those Senators who worked to keep the
package
of spending reductions at $3 billion. Insiders said there was an 11th-hour
move to increase the spending reductions to closer to $4 billion. The
National Farmers Union (NFU) called the committee action “a step
in the wrong direction for rural America.”
Included in the approved package of cuts are an across-the-board 2.5%
cuts in all commodity program payments, and cuts to the Conservation
Reserve Program and the Conservation Security Program. In addition,
the Environmental Quality Incentives Program (EQIP) was reduced, and
cuts in payments for the nonrecourse sugar loan program, the cotton
competitiveness program, and advance direct payments to farmers were
approved.
Ranking committee member Sen. Tom Harkin (D-IA) opposed the plan put
together by Chair Sen. Saxby Chambliss (R-GA), calling it “part
of a broader Republican plan” to take income and conservation
payments from farmers as part of the Bush Administration’s effort
to cut deficits. Harkin offered unsuccessful payment limitation amendments
aimed at “ensuring…the largest farms were not…avoid(ing)
budget cuts” in ways not available to smaller farmers. He commended
Chambliss for not cutting nutrition programs.
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BSE UPDATE
R-CALF Bid for Rehearing on Canadian Border Complaint Denied
A second R-CALF request filed with the Ninth Circuit Court of Appeals
to rehear its complaint against USDA for reopening the Canadian border
to live cattle trade was denied this week. This ends the appeals process
that sought to reinstate a previous federal injunction that stopped
a USDA rulemaking to resume live cattle imports from Canada. However,
R-CALF said it will continue its effort to get a formal hearing on
its complaint against USDA.
Return to top Thailand Resumes U.S. Beef Purchases
Thailand said it will begin to import beef from the
U.S. for the first time since 2003, a move Secretary of Agriculture
Mike Johanns said
should be an example to other Asian nations. “It is now time
for Japan, South Korea, China and other Asian nations to follow suit,” said
Johanns. “There
is no justifiable reason for borders to be closed to U.S. beef.” President
Bush will meet with the Japanese prime minister next month during a
Tokyo stopover on his way to an Asian trade summit. The White House
said beef trade is high on the President’s list of topics to
be discussed.
In a related development, Sen. Conrad Burns (R-MT) met this week with
Japanese Ambassador Ryozo Kato, urging the diplomat to take the message
back to his government that now is the time to resume trade. Burns
said the meeting was “very positive.”
Return to top USDA Abandons Plan to Close FSA Offices
In the face of broad Farm Belt opposition to its plan and an upcoming
Senate Agriculture Committee hearing, USDA this week quietly sent word
to Capitol Hill it has shelved its proposal to close up to a third
of its Farm Service Agency (FSA) offices across the country. Ag panel
chair Sen. Saxby Chambliss (R-GA) said the department failed to demonstrate
the closures would result in improved services for farmers. He was
joined by Rep. Bob Goodlatte (R-VA), chair of the House Agriculture
Committee, in praising the USDA move. In a related development – and
as testimony to the upcoming midterm elections – several members
of both the House and Senate issued press releases about how they personally “saved” their
respective state and district FSA offices.
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U.S. Taking Flak on Doha Ag Subsidy Proposal
With the U.S.’s bid to reduce trade subsidies
rebuffed by the European Union (EU), U.S. Special Trade Representative
Rob Portman
said this week without concessions from WTO partners, the Hong Kong
ministerial meeting in December could blow up as it did in Cancun in
2003. Last week, Portman offered to cut U.S. trade distorting subsidies
by 60%, contingent upon receiving proposals to increase
market access and reduce tariffs from the EU and a group of developing
nations led by Brazil and India. In response to the U.S. offer, Portman
said, “we received proposals that are not even close to comparable
to the U.S. offer.” The U.S. offer was praised by Canada and
Australia, but was rejected as “too ambitious” by Japan,
while criticized as not going far enough by developing countries.
When the EU released its counteroffer on reduction of subsidies, an
irate French government, joined by Italy and Spain, demanded a meeting
of the EU member states to review the EU offer. Portman said he will
not be making another proposal to the EU; “the ball is in their
court,” he said.
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Alaskan Wilderness Drilling Included In Senate Budget Package
Saying it is necessary for the committee to meet its budget obligations,
the Senate Energy & Natural Resources Committee this week approved
a measure that would allow drilling in the Arctic National Wildlife
Refuge (ANWR). ANWR oil exploration was a controversial – and
eventual unsuccessful – proposal in the omnibus energy legislation
finally passed last year by Congress. Because the ANWR language is
part of the budget reconciliation bill – a move the committee
says will raise $2.4 billion over the next five years – it is
protected from filibusters once the full package hits the Senate floor.
Under the provision, there would be two oil lease sales completed by
Oct. 1, 2010, and drilling would be limited to 2,000 acres in the coastal
plain. The site is expected to produce 1 million barrels of oil per
day.
Return to top Senate Panel Approves Bioshield II Bill; Avian Flu Action Coming
A major revamping of federal biodefenses was approved
this week by the Senate Health, Education, Labor & Pensions Committee.
The bill includes improvements in federal programs to spur development
of medical countermeasures, including vaccine and drug development,
in the event of a terrorist attack. Still to come are provisions from
Sen. Edward Kennedy (D-MA) on reworking the bill’s physician
and drug company liability protections, as well as provisions being
pushed by Sens. Pat Roberts (R-KS) and Hillary Clinton (D-NY) to enhance
U.S. readiness to deal with both potential seasonal and avian influenza
outbreaks.
Bill sponsor Senator Richard Burr (R-NC) emphasized this legislation
focused on the creation of new drugs and vaccines, while a follow-up
bill will address deficiencies in the public health system. Work on
this separate bill with public health language would begin November
1. Burr said this bill is about creating a partnership between the
government and the private sector in conducting research & development
and creating innovative therapies. He cited the “valley of death” as
the number one obstacle facing companies.
Senators continue work on several provisions of the bill including
liability and orphan drug provisions, and hope to bring the bill to
the Senate floor next week, possibly Tuesday.
On avian influenza preparedness, the White House is not sure the BioShield
II legislation is the right vehicle, with insiders saying the Administration
will have its own bird flu bill introduced rather than amending the
Senate biodefense bill on the floor. The White House will likely ask
for money and liability protections relative to bird flu vaccine purchases.
On the House side, the Energy & Commerce Committee this week said
it will introduce new legislation to deal with the threat of avian
influenza. Committee Chair Rep. Joe Barton (R-TX) said his committee
is “working to develop a legislative package to provide resources
and promote initiatives to improve the nation’s ability to respond
to this and other biological threats.” The House bill would increase
vaccine stockpiles, provide liability protections, provide research
incentives, plan quarantine activities, assure risk communication,
increase international cooperation on treatment, and further enhance
public health preparedness.
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Budget Reconciliation Moves Forward
After a delay in timing because of congressional focus
on hurricane relief, House and Senate committees appear poised to consider
legislation
next week relevant to expenditures and savings for programs in their
jurisdiction. The budget committees will bring packaged spending and
spending cuts provisions to accord with the congressional budget resolutions.
Key provisions of these bills will relate to spending and savings
in the Medicare and Medicaid programs, including provisions relating
to reimbursement for prescription drugs, among other things.
Senate Finance Committee leadership made public a
series of provisions related to Medicare and Medicaid described as
achieving savings, while
targeting resources for program improvements. A number of provisions
are directed to reducing Medicaid fraud and abuse, including encouraging
states to pursue claims under their tort claims acts and increasing
federal resources for fraud and abuse compliance and enforcement activities.
Provisions related to Medicare include the initiation of a “value-based
purchasing” program designed to reward efficiency and quality
on the part of Medicare providers such as physicians, hospital and
end stage renal disease (ESRD) and skilled nursing facilities. According
to the committee’s projections, the proposals in total save $4.26
billion in Medicaid and $5.76 billion in Medicare. Committee Chair
Charles Grassley (R-IA) indicated he will have majority support
for the package.
Prescription drug related proposals include the following:
• The definition of Average Manufacturer Price (AMP), used to
calculate pharmacy payment for covered prescription drugs, is changed
by (1) specifying that sales exempted from the best price calculation
would be exempted from AMP and (2) defining a new “weighted” AMP,
as the “average manufacturer price for the form of the drug,
weighted by the total number of units sold relative to the sum of all
units for all forms of the drug that are therapeutically equivalent
and bioequivalent.” The crucial issue of exactly what is intended
by “therapeutically equivalent and bioequivalent” is not
yet clear.
• Current requirements related to the Federal Upper Payment
Limit (FUL) (the maximum amount the federal government will pay for
multiple source outpatient prescription drugs) would be changed to
relate to the new “weighted” AMP, and would be 115% of
the weighted AMP. CMS would be authorized to contract with third parties
to calculate the AMP and other information necessary to calculate the
FUL.
• States would be required to pay a dispensing fee greater for
generic drugs than for innovator multi-source drugs.
• The secretary would be required to establish
a list of covered prescription drugs that need specialty pharmacy care
management, for
purposes of calculating the dispensing fee which also would include
other factors such as pharmacists’ time, costs of handling drugs
and facility overhead.
• The prescription drug rebate under Medicaid would be increased
from the current 15.1% to 17%.
• The price of an “authorized generic” drug would
be included in the calculation of the new AMP and the best price. Essentially,
authorized generics would be treated as innovator drugs, not generic
drugs, for purposes of the Medicaid rebate calculation.
• States would be required to report information about physician-administered
drugs, so rebates could be obtained for these products as well as for
outpatient drugs.
The House Energy & Commerce Committee also is expected to mark
up legislation next week to achieve savings from the Medicaid program.
To date, the committee has not released its proposals publicly, but
they are expected to include a re-definition of AMP, among other changes
to reduce prescription drug expenditures.
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New Bills
A number of new bills have been introduced. Click
here to send a request for a copy of the text or more information about
the bill.
S.1877
Sen. Max Baucus (D-MT) introduced a bill to prohibit the closure or
relocation of certain county offices of the Farm Service Agency.
S.1873
Sen. Richard Burr (R-NC) offered legislation to prepare and strengthen
the biodefenses of the United States against deliberate, accidental,
and natural outbreaks of illness.
S.1880
A bill introduced by Sen. Edward Kennedy (D-MA) seeks to enhance biodefense
and pandemic preparedness activities.
S.1882
Sen. Charles Schumer (D-NY) proposed a bill to provide for a national
tire fuel efficiency program.
S.1900
Sen. Debbie Stabenow (D-MI) offered legislation to stabilize the amount
of the medicare part B premium.
S.1903
Legislation proposed by Sen. John Rockefeller (D-WV) would require
drug manufacturers to report the average manufacturer price and the
best price of authorized generic drugs and any other drugs sold under
a new drug application.
H.R.4063
Rep. Nita Lowey (D-NY) introduced a bill that would direct the Secretary
of Health and Human Services to develop a policy for managing the
risk of food allergy and anaphylaxis in schools.
H.R.4062
Legislation offered by Rep. Nita Lowey (d-NY) and 31 others would amend
the Public Health Service Act with respect to preparation for an
influenza pandemic, including an avian influenza pandemic.
H.R.4103
Rep. Sherrod Brown (D-OH) introduced a bill to provide for improved
accountability in the Medicare Advantage and prescription drug programs.
H.R.4114
Rep. Frank LoBiondo (R-NJ) offered a bill to prohibit the sale of crude
oil, gasoline, diesel fuel, natural gas, or petroleum distillates
at an unjust or unreasonable price.
H.R.4118
A bill introduced by Rep. Ron Paul (R-TX) would prohibit Federal payments
to any individual, business, institution, or organization that engages
in human cloning.
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Inside
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