A recent report by Consumer’s Union and Medical Rights Center concluded that private insurance companies were not getting the best deals on prescription drugs for Medicare recipients. The report quoted Robert Hayes, President of the Medical Rights Center as saying, “Day after day we see men and women with Medicare unable to get the medicine they need because of the confusing and exploitative marketplace that dominates the for-profit drug offerings from private insurance companies”. As a result of their findings, the two organizations recommended that older adults and persons with disabilities be given the option of choosing a prescription plan through the original Medicare program in addition to the Part D plans currently run by private insurance companies. In view of the many problems Medicare Part D participants have encountered, a revamping of the program seems reasonable. Some members of Congress agree with this recommendation and consequently introduced the Medicare Prescription Drug Savings and Choice Act on October 24, 2007.
This Act (HR 3932) is meant to deliver a meaningful benefit and lower prescription drug prices under the Medicare Program. It says in part, “…the Secretary shall offer one or more Medicare operated prescription drug plans (as defined in subsection (c)) with a service area that consists of the entire United States and shall enter into negotiations in accordance with … pharmaceutical manufacturers to reduce the purchase cost of covered part D drugs for eligible part D individuals who enroll in such a plan.” It further states, “…the Secretary shall negotiate with pharmaceutical manufacturers with respect to the purchase price of covered part D drugs in a Medicare operated prescription drug plan and shall encourage the use of more affordable therapeutic equivalents to the extent such practices do not override medical necessity as determined by the prescribing physician.”
Under current law the government is expressly forbidden from negotiating the price of prescription drugs on behalf of Medicare beneficiaries. The main argument advanced by proponents of HR3932 and other advocates for granting the federal government the power to negotiate is that lower prices for prescription drugs could be obtained and passed on to Medicare beneficiaries. By using the market power of several million Medicare beneficiaries they argue that the pharmaceutical companies would provide deep discounts to the federal government in order to prevent the loss of a significant portion of their market.
On the other hand, those who oppose allowing the federal government to negotiate drug prices claim that the resulting discounts would not be significant and that the governments efforts, if effective, might drive prices down to the extent that research and development would be discouraged and fewer products would be introduced.
I honestly don’t know who is right on this issue. I do know that a significant increase in Medicare premiums is slated for 2008. The Medical Rights Center predicts that this increase will result 1.6 million people being reassigned to a different drug plan. I have already started searching for a replacement plan and I can only tell you that the confusion grows.
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