House Speaker Nancy Pelosi (D-Calif.) has just launched her 100-hour legislative agenda, and healthcare is at the top of her list. In these first few hours, Pelosi plans to “fix” Medicare Part D by allowing the government to negotiate drug prices.

Leading Democratic Reps. John Dingell (Mich.) and Charles Rangel (N.Y.) have already introduced legislation to make it happen — the “Medicare Prescription Drug Price Negotiation Act of 2007.” The bill is being rushed to a floor vote Jan. 12 without any public debate, committee hearings or minority participation.

That’s a shame — because, if passed, the legislation would do a lot more harm than good. We know this because the drug benefit offered by the Department of Veterans Affairs already allows the government to negotiate prices. And it has not improved quality for the nation’s veterans.

In fact, the VA benefit is a terrible model for Part D. While Medicare ensures access to virtually any FDA-approved medicine, the VA drug formulary is extremely restricted.

Only 19 percent of drugs approved by the FDA since 2000 are listed on the VA formulary, and only 38 percent of drugs approved in the 1990s are listed. That’s why Medicare offers more than 4,300 different drugs while the VA plan offers only around 1,300.

The cholesterol-lowering drug Lipitor, for example, isn’t on the VA’s list, even though it’s shown remarkable success at lowering the risk of heart attack and stroke.

Similar cholesterol-lowering statins are on the formulary, and Pelosi would likely suggest directing patients to one of them. But what about patients who have adverse reactions to the other drugs? The fact is, in medicine, one size doesn’t fit all: Patients react to different drug variations in different ways.

Not surprisingly, Columbia University’s Frank Lichtenberg recently found that the VA’s restricted formulary might be having a negative impact on the life expectancy of our nation’s veterans.

In the six years before the formulary was introduced in 1997, both overall U.S. male life expectancy and veterans’ life expectancy increased significantly. From 1997 to 2002, though, while overall U.S. male life expectancy continued to rise, growth in veterans’ life expectancy came to a halt.

When a single buyer must meet the needs of 4 million people, the result is predictable — rationing. That’s because the buyer, in this case the VA, tries to control costs by limiting the availability of certain drugs.

With Medicare — which supports around 40 million seniors and accounts for about 40 percent of all U.S. drug spending – the rationing problem would be far greater than with the much smaller VA. And there would also be the issue of price controls.

With its enormous purchasing demands — and backed by the overwhelming financial and regulatory power of the federal government — Medicare would simply dictate prices, distorting drug markets on an unprecedented level.

As a result, drug manufacturers would be forced to sell drugs at below-market prices. In Pelosi’s economic fantasyland, that doesn’t matter because drug companies have infinite profit margins. No matter how much we squeeze profits, this magical theory says, the companies will keep on inventing new cures out of the goodness of their hearts.

But in reality, it costs a company hundreds of millions of dollars to develop a new drug and see it through the FDA approval bureaucracy. And sometimes, that research and development is fruitless. In early December, after spending nearly $1 billion, Pfizer decided to halt clinical trials on its latest cholesterol-lowering drug.

If companies cannot sell at a price that covers costs and turns a profit, they will stop inventing new drugs.

Government intervention has already choked off drug innovation virtually everywhere else. That’s why people the world over use cancer and AIDS medications invented in the United States. If we mandate price controls here, more life-saving breakthroughs will be lost.

The Medicare drug plan is far from perfect. But at least it hasn’t resulted in price controls, drug rationing or a reduction in the development of new cures.