Would Allowing Medicare to Negotiate Drug Prices Help or Hurt?

Medicare negotiate drug prices

Much legislation has been written to allow Medicare to be involved in setting the prices of prescription drugs with the aim to bring down high drug costs. The current law (in the Medicare Modernization Act of 2003) says that “in order to promote competition,” the secretary of Health and Human Services (HHS) “may not interfere with negotiations between drug manufacturers and pharmacies and prescription drug plans.”

Proponents of the government being able to negotiate drug prices believe it would lower the cost of prescription drugs, particularly for high-priced drugs. According to the Kaiser Family Foundation, 82% of the public supports the proposal to allow Medicare to negotiate drug prices.

Opponents believe that the Secretary of Health and Human Services (HHS) would not be able to negotiate a better deal than private plans already do. And if the secretary could, then pharmaceutical companies would reduce their investment in pharmaceutical research and development, and we would have less innovation and availability of the new drugs we need in the U.S. Opponents maintain that the Medicare Part D program is successful because of the competition within the program.

With Part D as it currently stands, private plans separately negotiate drug prices with pharmaceutical companies, make formularies, and apply utilization management tools to control the costs. This is a contrast to Medicaid and the Department of Veterans Affairs (VA), where the government is able to regulate drug prices.

A new bill was introduced in Congress last week to allow the government to negotiate drug prices, The Medicare Drug Price Negotiation Act of 2017, sponsored by Rep. Elijah E. Cummings (D-MD) and Sen. Bernie Sanders (I-VT), among others. In addition to changing how Medicare drug prices are set, this bill would restore the rebates that drug manufacturers used to pay to certain Medicare beneficiaries who are dual-eligible for Medicaid. The Congressional Budget Office (CBO) estimated that restoring these rebates would save taxpayers $145 billion over 10 years.

The debate remains hot over the drug price negotiation issue, and will likely remain so. Much legislation has been written, but none passed as of yet.

Related Links

New Bill Would Allow Medicare to Negotiate Drug Prices

New Bill Would Expand Medicare to Include Dental, Hearing, Vision

7 Acts of Legislation that Improve Medicare

Seniors Want Feds to Negotiate Medicare Prices with Drugmakers

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