Did you know that although Medicare is the largest provider of prescription drugs in the US, they are not allowed to negotiate for better pricing? Under the law passed in 2003, The Medicare Prescription Drug, Improvement, and Modernization Act of 2003, the Secretary of Health and Human Services is not allowed to negotiate for lower drug prices on behalf of Medicare Part D recipients. This law does not prohibit Medicaid or the Veterans Administration from negotiating, and as a result, they pay far less for the exact same medication. They pay on average between 70-80% more! Yes, you read this correctly, the largest provider of drugs in the United States pays on average 75% more for the same drugs than do other U.S. government programs.
Not only that, but the very same drugs purchased in the US typically cost several times more than the identical drugs purchased in other countries. According to the Center for Economic and Policy Research, the U.S. government could save $976 billion over ten years if Medicare negotiated the same prices for drugs as people in Denmark pay. A senior citizen relying on Medicare for their prescription drugs will pay on average two to six times more than the rest of the world. One of the main reasons for that, is that other countries not only negotiate price, but negotiate whether the drug will make it into that market at all. Many governments incorporate drug review boards that determine whether a drug provides a need in the current market relative to its cost and other drugs currently in the marketplace. Being barred access from an entire country can go a long way towards a negotiation.
Various bills have been introduced over the last several years which would allow the Secretary of HHS to negotiate for lower drug prices, none of these bills have made it into law. According to a Kaiser Family Foundation poll, 82% of Americans want Medicare to negotiate for lower drug prices. Currently, there are members of both parties that see this as a logical step in lowering of drug prices for those that rely on Medicare. However, there are numerous bills that do everything from removing the noninterference clause to requiring negotiation to those that spell out the exact path forward, with none having significant support.
