For Medicare Savings, Send a Negotiator to the Pharmacy

[dkf]

President Barack Obama has his eye on Medicare’s prescription-drug program as one place to find significant savings in the federal budget.

It’s a big target, given that the price tag is expected to reach $68 billion this year, rising to $175 billion by 2021. A new federal report comparing Medicare with Medicaid demonstrates there’s ample room for savings.

Medicaid gets much larger rebates from drugmakers than Medicare does, according to the report. Looking at 100 brand- name medicines that cost Medicare the most in 2009, the inspector general for the Department of Health and Human Services found that the median rebate to states for Medicaid payments for these medicines was three times the size of rebates to Medicare. For 68 of these drugs, Medicaid’s rebate was at least twice as large as Medicare’s.

Why can’t Medicare mandate rebates as Medicaid does? Because in creating Medicare’s Part D prescription-drug program in 2003, Congress expressly forbade it. Medicare gets back only as much as can be negotiated by the private insurers that contract with the program. And their negotiating power is limited, because they lack the authority to restrict the list of medicines they cover. It’s difficult to bring drugmakers to the bargaining table unless they are presented with the choice of lowering their prices or seeing their medicines dropped from the formulary.

http://www.bloomberg.com/news/2011-09-07/for-medicare-savings-send-a-negotiator-to-the-pharmacy-view.html

[DURHAM D]

1. It was good of Bloomberg not to mention that in the run up to

the so called health care reform legislation the White House made a side deal with Big Pharma not to push for these suggested changes. In return Big Pharma promised not to run an ad campaign against the reform legislation.

As I recall Pelosi was not advised of this backroom deal until several weeks/months later.