Prescription Drugs
The Argument
Seniors who get their drugs from the Part D program should pay a fair market price for prescription drugs. Virtually every government or private organization that purchases prescription drugs tries to negotiate the best prices possible—except for the private drug provider plans created under Medicare. The current system gives drug companies an inflated price. They should instead be paid a fair, negotiated price.
Because Medicare is overcharged for drugs, the elderly suffer. If Medicare paid a fair price, the savings could be passed along to the elderly in the form of lower costs or greater insurance benefits. Because drug prices are inflated, many Americans are forced to cut pills in half, skip doses, or go without. It’s time for us to put American seniors’ health above drug companies’ profits.
Drug companies don’t need more money—but elderly Americans do. The pharmaceutical industry is the third most profitable industry in the world, according to Fortune Magazine. With prices of food, gasoline, and other necessities rising, all Americans—especially Medicare beneficiaries—need financial relief.
Progressive Solution
Amend the Medicare Modernization Act to require the Secretary of Health and Human Services to negotiate fair prescription drug prices. Or create a real Medicare prescription drug plan (one actually run by Medicare) that forces drug companies to compete to provide drugs at the lowest price. Lowering Medicare drug costs – and reducing the influence of the drug industry-- is an important first step to bringing skyrocketing prescription drug and health care costs under control for all Americans.
Fast Facts
Drug companies have wildly increased prescription prices in recent years. From 2002 to 2007, prescription drug prices increased by 50 percent, more than 2½ times faster than inflation. [AARP] Eight in ten Americans think that the cost of prescription drugs is too high, and four in ten report struggling to pay for medication prescribed by their doctors. [Kaiser Family Foundation] Twenty-nine percent of Americans go without prescribed medication due to its cost. [Kaiser Family Foundation]
The law that created Part D Medicare prescription drug benefits prohibits price negotiation by the government. The law, enacted in 2003, after an incredible lobbying blitz by drug companies, states that the Secretary of Health and Human Services “may not interfere with the negotiations between drug manufacturers and pharmacies and PDP sponsors; and may not require a particular formulary or institute a price structure for the reimbursement of covered part D drugs.” 42 U.S.C. 1395w-111(i). This part of the law was a giveaway to drug industry lobbyists written in part by Rep. Billy Tauzin, who later took an extremely lucrative position as the CEO of PhRMA, the drug industry’s lobbying group. [New York Times]
Medicare is the only federal program that doesn’t negotiate a fair price for prescription drugs. The Department of Veterans Affairs, the Department of Defense, the Public Health Service, the Bureau of Prisons, and other federal agencies all buy drugs at negotiated prices. Prices for drugs purchased under Medicaid, which is a joint federal-state program, are also aggressively negotiated. But Medicare Part D drug prices are handled by more than 2,000 private insurance plans. [Kaiser Family Foundation]
Because federal negotiation is prohibited, elderly Americans are being overcharged billions of dollars. Agencies that negotiate get much better drug prices than the private Part D insurance plans do. The Department of Veterans Affairs, for example, pays only about 42 percent of the list price for brand-name prescription drugs. [CBO] If Medicare was allowed to negotiate with manufacturers, the program would save approximately $90 billion a year, which could be passed along to the elderly in the form of lower costs or greater benefits. [Center for Economic and Policy Research]
A majority in both the U.S. House and Senate favor negotiation of prescription drug prices but the legislation was killed by a conservative filibuster. A bill to allow the Medicare program to negotiate prescription drug prices was considered in both the U.S. House and Senate in early 2007. The House passed the bill, HR 4 by a vote of 255 to170. But Senate conservatives killed the measure by using a filibuster to block a final vote. Advocates fell 5 votes short of the 60 Senators needed to overcome the filibuster against S.3.
