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Bargaining for lower drug prices
In my compact New York City apartment, there are practical considerations to buying a 12-pack of paper towels, like where will we put the now-displaced vacuum cleaner? So it’s rare we get to take advantage of the cost savings of buying in bulk. The federal government has no such excuse when it comes to a far more expensive commodity: prescription drugs. And yet it hasn’t tried to lower drug prices in the Medicare system by negotiating for bulk discounts. How is it that the government’s Medicare administrators don’t exercise their clout the way ordinary consumers do? Congress and the White House don’t have to look far to find a role model: The U.S. Department of Veterans Affairs routinely bargains for, and gets, lower drug prices for its 5.2 million beneficiaries. A September 2005 report from Families U.S.A., a nonprofit health-care advocacy group, found that the lowest price a consumer could get with a Medicare discount card was almost always much higher than the lowest price negotiated by the VA. While the report was based on the soon-to-end Medicare drug discount card program, Consumers Union, the publisher of Consumer Reports, expects that, in general, the Medicare prescription drug plans that will go into effect in January 2006 will not do much better. When Congress overhauled Medicare, providing limited prescription drug coverage for seniors, pharmaceutical companies successfully pushed through a provision that bars Medicare from negotiating lower prices. Instead, what seniors got was Medicare Part D, a flawed system that leaves big gaps in coverage and requires seniors to choose among dozens of confusing drug plans. Some states are taking matters into their own hands. Maine, a leader in addressing prescription drug costs, uses its purchasing
power to leverage Needless to say, drug companies are waging a full-scale offensive against any such efforts. In Maine, the pharmaceutical companies sued--unsuccessfully--to block that state’s bill. In California, the industry has contributed at least $80 million to defeat Proposition 79 and promote Proposition 78, a sham designed to confuse voters that gives the state no bargaining power in negotiations with drug companies and relies entirely on the industry’s goodwill. Of course, lowering the price of drugs that aren’t effective or safe helps no one. States, the VA, and private officials are using available data to identify the best and safest drugs. The federal government should do the same. (Note that all consumers can get information on safe, effective, and affordable drugs in certain categories by going to www.CRBestBuyDrugs.org, which is a free Consumers Union Web site.) The tens of billions of dollars that Medicare spends on drugs each year is money that comes straight from taxpayers’ pockets. We’d all be better off if the government bargained harder for the drugs we need at prices we can afford.
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