Will New Congress Lower Drug Prices?

Guy Russo, a retired bank officer, knows a bad business deal when he see one — and he thinks seniors are being overcharged for prescription drugs, CBS News correspondent Wyatt Andrews reports.

"It's highway robbery," Guy says. "That's what I really thought."

Robbery, he says, because under the new Medicare drug benefit, private insurance companies — not the federal government — negotiate the price of drugs.

"I think a lot of money is being wasted," Guy says.

Here's what he means. Guy's wife takes Enbrel, a very expensive arthritis drug which under his Medicare plan cost taxpayers $11,900 a year. By contrast, when the federal government, under the Veterans Administration, negotiated for Enbrel this year, the cost was $4,300 dollars. That's a $7,600 difference — for one patient in one year.

This is why, for Democrats, reforming the Medicare drug benefit is near the top of their agenda.

"The federal government here would negotiate for the best prices and then, this would afford huge advantages for our senior citizens," says Rep. John Dingell, D-Mich.

Republicans call that short-term thinking. They say the private insurance approach has driven drug prices down already and over time will save taxpayers even more.

"We have a robust, efficient market where people are negotiating price in a very effective way," says Health and Human Services Secretary Mike Leavitt.

Not surprisingly, Dingell doesn't agree.

"I think Secretary Leavitt is a wonderful man, but this is the company line. This is what the Republicans said all the way through here and they are about as wrong as they are ever going to be," he says.

The drug company lobby, meanwhile, is likely to fight Medicare reform tooth and nail. This won't just test the Democrats' ability to pass laws, — it will test their promise to change the special-interest culture in Washington.