Why can't Medicare negotiate prices for drugs?

[nate]

I was reading an article that casually mentioned that Medicare is the nation’s largest drug-buyer (makes sense) but can’t negotiate the prices they pay for drugs (doesn’t make sense). Why?

[Bijou_Drains]

who do you think donates a lot of money to politicains? Pharma companies.

[Fear_Itself]

Because the Medicare Part D legislation was specifically written to prohibit such negotiation. As was already pointed out, pharmaceutical companies donate a lot of money to campaigns.

[Northern_Piper]

Because when a government uses its purchasing power to negotiate a lower price it’s socialism.

When a corporation like Wal-mart uses its purchasing power to negotiate a price, that’s capitalism.

[Wesley_Clark]

I believe the VA can, but medicare can’t.

As to why, because it would piss off the pharma industry who can donate millions to whomever they want.

Its the same reason it is illegal to buy drugs from overseas. You can manufacture drugs in mexico or india, but it is illegal to buy them from pharmacies there (as well as Canada or France). Same reason, because doing that cuts into profits of domestic companies.

[Grim_Render]

Because it would cut into the profit margin of pharmas if they did. Drug prices would come down towards Canadian prices.

[FeAudrey]

Medicare doesn’t directly buy the drugs. You enroll in a “Part D” plan with an insurance provider, who gets money from you and from the Feds, and the insurer does the negotiating. So it’s Big Pharma vs Big Insurance.
My last year’s summary from my Part D provider (part of my Part C plan):

Average retail price – $1516.92

(provider) discount – $1257.19 (that’s where the “negotiating” comes in)

(provider) pays – $259.73

(I) pay – $0.00

[usedtobe]

It took 6 “it’s a conspiracy!” (at least it wasn’t “Obama is Muslim Socialist!”), FeAudrey did get the GQ answer in.

I have a policy with Blue Shield whereby the amount that Medicare D doesn’t pay is (largely) picked up by BS.

I once paid retail for one of the nastier drugs - $300. The negotiated price is about $35.

[GrumpyBunny]

@usedtobe

It took 6 “it’s a conspiracy!” (at least it wasn’t “Obama is Muslim Socialist!”), FeAudrey did get the GQ answer in.

Actually, all of the answers are correct – this is a many-headed beast.

It’s VERY well-documented that pharma lobbied heavily to prevent any price controls or negotiations with Medicare D, so it’s not a conspiracy theory.

[Wesley_Clark]

@usedtobe

It took 6 “it’s a conspiracy!” (at least it wasn’t “Obama is Muslim Socialist!”), FeAudrey did get the GQ answer in.

I have a policy with Blue Shield whereby the amount that Medicare D doesn’t pay is (largely) picked up by BS.

I once paid retail for one of the nastier drugs - $300. The negotiated price is about $35.

Yes, its a conspiracy to say that wealthy, powerful interests lobby the US government to get their way. Must be nice to live in a world so simple where such things can be discounted as fantasy.

FWIW, there are bills that would give medicare the ability to negotiate prescription drug prices, but they never get any traction.

Uncle Sam barred from bargaining Medicare drug prices, Senate candidate Tammy...

https://www.congress.gov/bill/113th-congress/house-bill/1102

[Northern_Piper]

From the wiki article on Medicare Part D:

By the design of the program, the federal government is not permitted to negotiate prices of drugs with the drug companies, as federal agencies do in other programs. The Department of Veterans Affairs, which is allowed to negotiate drug prices and establish a formulary, has been estimated to pay between 40%[25] and 58%[26] less for drugs, on average, than Medicare Part D.

Although generic versions of [frequently prescribed to the elderly] drugs are now available, plans offered by three of the five [exemplar Medicare Part D] insurers currently exclude some or all of these drugs from their formularies.…Further, prices for the generic versions are not substantially lower than their brand-name equivalents. The lowest price for simvastatin (generic Zocor) 20 mg is 706 percent more expensive than the VA price for brand-name Zocor. The lowest price for sertraline HCl (generic Zoloft) is 47 percent more expensive than the VA price for brand-name Zoloft.

—Families USA, No Bargain: Medicare Drug Plans Deliver High Prices[26]

Estimating how much money could be saved if Medicare had been allowed to negotiate drug prices, economist Dean Baker gives a “most conservative high-cost scenario” of $332 billion between 2006 and 2013 (approximately $50 billion a year), and a “middle-cost scenario” of $563 billion in savings “for the same budget window”.[27]

Former Congressman Billy Tauzin, R–La., who steered the bill through the House, retired soon after and took a $2 million a year job as president of Pharmaceutical Research and Manufacturers of America (PhRMA), the main industry lobbying group. Medicare boss Thomas Scully, who threatened to fire Medicare Chief Actuary Richard Foster if he reported how much the bill would actually cost, was negotiating for a new job as a pharmaceutical lobbyist as the bill was working through Congress.[28][29] A total of 14 congressional aides quit their jobs to work for the drug and medical lobbies immediately after the bill’s passage.[30]

[samclem]

@GrumpyBunny

Actually, all of the answers are correct – this is a many-headed beast.

It’s VERY well-documented that pharma lobbied heavily to prevent any price controls or negotiations with Medicare D, so it’s not a conspiracy theory.

So, you’re asserting that the health plans that manage part D have no negotiating rights? Cite.

[Squink]

GOP won’t let em. They’ve been manning the barricades on that horrendous government usurpation of the rights of free market companies since at least the 90’s.