Tag Archives: Affordable Health Care

BOTTOMLINE: Negotiating Drug Prices Will Make Affordable Health Care More Affordable

Publisher’s Commentary by Wallace J. Allen

Congress is preventing Medicare from performing one of the basic elements of cost savings. An element that is critical to the profit line and in some cases critical to the survival of a business. Negotiating based on all of Medicare’s clients creates a lower cost per unit than if each individual insurer negotiates its own price. Bulk negotiation and purchasing is the answer! Bulk purchasing via direct negotiations with drug manufacturers by Medicare could save billions of dollars.

The 2003 overhaul of Medicare included a concession to the pharmaceutical industry that prevents Medicare from negotiating drug prices directly with the manufacturers… Instead, the individual insurers pay for drugs based on their individual fragmented negotiations, a process which guarantees higher prices.

The drug prices for the Veterans Health Administration and Medicaid, which are negotiated by the federal government, are much lower than those paid by Medicare. A recent study by Carlton University and Public Citizen, an advocacy group, found the negotiated prices are generally 1/3 less than those paid by Medicare. Medicare pays the highest prices on the planet, for drugs manufactured in the USA. The same drugs are exported around the world and delivered for prices that are more often than not, one-tenth of prices in the USA. The same study estimates that negotiating Medicare’s cost could save 16 billion dollars per year.

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