Experts Debate Medicare Negotiation Legislation

Article excerpt

Legislation to mandate government negotiation on Medicare Part D drug prices has now passed the U.S. House of Representatives and been introduced in the Senate. And the debate has intensified across Washington. At a recent think tank session, Gerard Anderson, PhD., a health finance expert who has worked with Congressional Democrats, called for a law to let the government "trust in the markets, but make sure that they are working."

The Department of Health & Human Services (HHS), he said, should actively research, and make available semi-annually, information on the prices paid by Medicaid, Veterans Affairs (VA), and Canada drug-by-drug and even dose-by-dose. Then, if the markets are not working for Medicare beneficiaries, HHS should use its "bully pulpit" to call for reductions for those drugs with the largest price differences. Anderson, a Johns Hopkins University health policy professor who spoke at the think tank session last month at the American Enterprise Institute for Public Policy Research (AEI), also said he would want to know "the lowest price any Part D plan is paying for a particular drug-the best price the market has been able to achieve."

Anderson warned that markets sometimes fail, at a high cost to consumers. A 2004 paper he coauthored in Health Affairs found that "for the 30 most commonly prescribed drugs in the United States, the country was paying 52% more than the U.K., 67% more than Canada, and 92% more than France."

But Joseph Antos, Ph-D., an AEI scholar and former Congressional Budget Office (CBO) assistant director who spoke at the session, indicated that any negotiation requires the ability to say no or to shift market share to another product. That largely explains, he said, how the VA, with its staff doctors and good compliance with formularies, has been able to hold down prices. But shifting market share is not going to be nearly as feasible in the big world of Medicare, he added. Antos argued, for example, that because the House-passed legislation does not permit formularies, it contains no provision for saying no to the drug sellers and would have no impact on prices.

Indicating concern that government negotiation would become a government mandate, Antos pointed to an earlier law requiring sellers to give Medicaid their "best price." Both CBO and the General Accounting Office later found that prices rose first for people outside Medicaid and then for Medicaid itself, he said. …

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