Benefit Bulletin: November 2017

Benefit Bulletin: November 2017

Despite Support, No Bill Moving On Medicare Drug Price Negotiations

Ninety percent of the people participating in TSCL’s 2017 Senior Survey support giving Medicare the power to negotiate lower drug prices. But so far, Congress has taken no action on a number of bills introduced earlier this year.

Current law specifically forbids Medicare from negotiating with drug manufacturers, pharmacies, and prescription drug plan sponsors, and from requiring a particular formulary or from instituting a price structure for reimbursement of covered drugs. Yet these “noninterference” policies stand in stark contrast to how drug prices are determined in other federal programs. For example, drug manufactures may not charge the Department of Veterans Affairs (VA) any more than the lowest price paid by any purchasers in the private sector. Mandatory drug price rebates are required in Medicaid programs.

According to a report released by the nonpartisan Commonwealth Fund, prices for brand name prescription drugs doubled between 2008 and 2016. High prices and extreme price increases for brand name and “orphan” drugs for which there is no competition, are creating barriers to care and depleting financial resources of older Americans. Because Medicare doesn’t negotiate drug prices, costs vary dramatically between Part D plans as illustrated in our story Switching Drug Plans Can Save Big Money — Here’s Proof".

Proponents of keeping the system the way it is insist that “market competition works better if the government gets out of the way” where drug costs are concerned, but there is no evidence of this. Those who make that claim have no consumer or government savings to point to that proves they are right. To the contrary, in recent years drug makers (and insurers) have reduced competition though multiple mergers with competitors. Drug makers, including those of generics, have bought their competitors’ drugs to gain a monopoly, and then jacked up prices to stratospheric levels. Total prohibition of Medicare negotiation simply doesn’t work and should be eliminated. Good legislative policy should play a stronger role in guaranteeing access to prescription drugs at lower prices.

TSCL is working to convince Members to cut the high price of prescription drugs, and we urge you to contact your Members of Congress. Let your lawmakers know how rising costs are affecting you.


Source:  “Searching for Savings in Medicare Drug Price Negotiations,” Cubanski and Neuman, Kaiser Family Foundation, January 2017.  “Getting to the Root of High Prescription Drug Prices,” Waxman, Corr, Martin, Duong, The Commonwealth Fund, July 10, 2017.