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Senate moves to allow negotiation for pharma prices

Sen Wyden (D-OR) claims he has enough votes in the Senate to pass legislation authorizing the Secretary of Health and Human Services to negotiate for Medicare drug prices with pharmaceutical companies. Critics were quick to decry the move, with the pharma industry claiming such a move would not reduce prices, would be counter-productive, and unfair.
Which begs the question, if it would not reduce prices, why are they so concerned?
In any event, despite the present budget crunch and moves by the HHS Secretary to reject providing access to Medicaid for victims of Katrina and Rita due to the increased expense, pundits claim the measure is not likely to pass because “it faces strong opposition from the Bush administration, Republican leaders and the pharmaceutical industry” (Las Vegas Sun)
In a related development, a study was released that compared pricing under the Veteran’s Administration’s negotiated pharma arrangement to the new Medicare Part D card. The net –
– prices for 49 out of the 50 most common drugs were higher under the Medicare program than the VA; and
– the average annual cost of drugs would be $220 higher under Medicare than the VA.
The VA is the only Federal governmental unit that is permitted to negotiate directly wtih pharma firms. The study was conducted by Families USA.
What does this mean for you?
Higher taxes to pay higher prices for drugs, but perhaps that is better than the cost-shifting that would occur if the Feds got tough with pharma and squeexed them for lower prices.

One thought on “Senate moves to allow negotiation for pharma prices”

  1. If the proposed legislation passes it would change the basis of competition in the Medicare Part D industry. Currently, having the scale to negotiate competitive prices with pharma companies is a prerequisite for entry into this market. If the federal government negotiates prices for everyone, the primary basis of competition will be efficient data processing.

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Joe Paduda is the principal of Health Strategy Associates



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