June 05, 2018

Government Munificence: Negotiating Drug Prices in Medicare Plan D

"We've seen how monopolies - whether government granted or government 'sanctioned', through inadequate enforcement of competition laws - have built the fortunes of many of the World's wealthiest people. But there is another way to get rich. You can simply arrange for the government to hand you cash. This can happen in a myriad of ways. A little-noticed change in legislation, for example, can reap billions of dollars. This was the case when the government extended a much-needed Medicare drug benefit in 2003. A provision in the law that prohibited government from bargaining for prices on drugs was, in effect, a gift of some $50 Billion or more per year to the pharmaceutical companies."

The Price of Inequality: How Today's Divided Society Endangers Our Future by Joseph E. Stiglitz



Medicare Part D Prescription Drug Program was passed as the Medicare Prescription Drug, Improvement and Modernization Act (MMA) of 2003 and went into effect in 2006. The legislation establishes a voluntary program for people on Medicare for prescription drugs. The program does not allow the government to negotiate prescription drug prices yet subsidizes the variety of plans offered by private insurance companies. Instead, prices are worked out by drug companies and private insurance companies. 

This isn't about the divide between Republicans and Democrats. This is about the amount of control pharmaceutical companies and insurance companies have on the US government and how it affects the quality of the life of the individual. A Republican administration enacted legislation with this provision and Obama backed off negotiations to include it in legislation in order to get the Affordable Health Car Act passed. Trump did not include the language in his new health care reform bill. 

A Kaiser Family Foundation Poll published in August of 2015 showed 93% of Democrats and 74% of Republicans favor letting the government negotiate Part D prescription drug prices. So, a very popular idea meant to save money for seniors, people with disabilities and taxpayers is not being allowed to progress in congress because politicians are not standing up to pharmaceutical and insurance companies. 


Many bills to allow the government to negotiate drug prices have been proposed and killed in appropriations hearings since 2003. In October 2017, legislators introduced The Medicare Drug Price Negotiation Act of 2017 to direct the Secretary of the Department of Health and Human Services to negotiate lower prices for prescription drugs under Medicare Part D but the bill has stalled once again and Trump, who promised to include this in his health plan reform bill removed it just before unveiling the proposed legislation. 

By the way, the US Department of Veterans Affairs, a government agency, does negotiate the cost of pharmaceuticals for those who have served in the military. So the government demands they control negotiations on the prices of prescription medication for the military, but not US Citizens who have not served. 

So. Do You think the US Government should be negotiating prices for prescription drugs? Why or Why Not? 


The Price of Inequality

Article Reference: 

Medicare Part D Content and Appeals
Article Fact Checking on Medicare Part B
Mother Jones Article on Lobbying Efforts
Obama Back of Negotiations
Kaiser Family Foundation Poll
US Department of Veterans Affairs Drug Prices
Trump Removes Language for Government Negotiations