The Amendment on Negotiating Medicare Drug Prices would have authorized the Secretary of Health and Human Services to negotiate with pharmaceutical manufacturers to get the best possible bulk prices for drugs purchased under the new Medicare Part D prescription drug plan. The amendment would repeal the "non-interference provision" of the Medicare prescription drug benefit, which prohibits this type of negotiation.
The Middle-Class Position:
Often living on fixed incomes, America's seniors struggle to cope with prescription drug prices that increase every year. The new Medicare prescription drug plan was ostensibly designed to save these seniors money on needed medications. But the plan provides far less savings than it could -- both for the seniors it covers and for the taxpayers who bear the costs of the new plan -- because it fails to take advantage of the federal government's ability to negotiate for better prices by buying in bulk. Instead, the program relies on individual insurance plans, none of which has the purchasing power of the federal government, to make drug purchases, resulting in a less efficient system with higher prices. Not only do most industrialized countries, including Canada, use their bulk purchasing power to bargain for better drug prices, but the United States Department of Veterans' Affairs (VA) also uses this common-sense practice to reduce its costs. Studies suggest that the prices negotiated by the VA for many drugs are substantially lower than those offered under the new Medicare plan. Middle-class Americans, whether they are senior citizens, taxpayers or both, cannot afford to see the federal government squander this opportunity to rein in the ever-escalating costs of prescription drugs.
From the Experts:
“The Medicare Modernization Act [MMA] approved by Congress in 2003 was not designed to create to create the most efficient possible prescription drug insurance for Medicare beneficiaries. As a result, it costs the government and beneficiaries considerably more than necessary. If Medicare were allowed to negotiate directly with the drug industry, or to allow a single agent to negotiate on its behalf, it could purchase drugs at prices that are far lower than… private insurers would pay under the system put in place in the MMA.”—Dean Baker, Economist and co-director of the Center for Economic and Policy Research (January 2006)
“I would like to have had the opportunity to negotiate.”—Tommy Thompson, Former Bush Administration Secretary of Health and Human Services, in response to a question about what he wished he had accomplished with the Medicare prescription drug benefit (December 3, 2004)
“Had the Medicare Reform Act allowed direct negotiation for Medicare patients, similar to the manner in which the Department of Veterans Affairs negotiates primary pharmacy purchasing, we estimate that a typical patient being treated for [heart] disease could save at least 50% annually on the costs of prescription medicines under coverage from the anticipated prescription card plan.”—John Hayes, MD; Heather Walczak, MD; Allan Prochazka, MD; writing in the Journal of the American Medical Association (July 2005)
Beyond this Bill:
Many Senators opposing the Amendment on Negotiating Medicare Drug Prices argued that it was important to see the new prescription drug plan in action before making any changes to its provisions. Now that the plan is underway and it's clear that greater savings for the public and the plan's beneficiaries could be achieved by authorizing the federal government to negotiate drug prices, Congress should authorize this measure. The Medicare Enhancements for Needed Drugs Act (S. 239) currently before the Senate Committee on Finance, would do just that.
Percentage increase in the cost brand-name drugs commonly prescribed to seniors between 2000 and 2005: 40.5
Percentage rate of general inflation during this period: 17.5
Percentage of Americans who support the idea of Congress allowing the federal government to negotiate with drug companies for lower prices on Medicare prescription drugs: 77
Projected cost to the federal government of the first ten years of the Medicare prescription drug benefit: $723 billion
Minimum estimated savings compared to the current system if Medicare were to negotiate drug prices directly with pharmaceutical companies over the first eight years of the program, according to the Center for Economic Policy Research: $332 billion
Median reduction in the annual cost of 49 of the 50 most frequently prescribed drugs when purchased through the VA rather than by using Medicare drug discount cards: $220.44
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