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Commentary

Yes. Let the Government Bargain with Drugmakers
Karen Davenport, The Philadelphia Inquirer, 12-6-06

The Philadelphia Inquirer offers two competing viewpoints on federal drug price negotiations. The first, by Karen Davenport, argues that there are several ways that the government can—and should—"take control of drug prices" for the benefit of taxpayers and seniors.

There are several ways the White House and Congress could strengthen Medicare's ability to negotiate drug prices. One option would be for Medicare to operate its own drug benefit, negotiating drug prices for this program. This option would enable Medicare beneficiaries to enroll in drug coverage through the Medicare program itself, with the confidence that the nation's largest prescription–drug buyer was providing them with the best protection from high costs.

Medicare could also negotiate with manufacturers for better prices on certain types of prescription drugs. When private plans establish preferred drug lists, they secure better prices by favoring one manufacturer's products over others—but when there are few or no competing drugs, the plans have little leverage. A national buyer could get better results and establish prices for this subset of drugs that would apply to all drug plans and HMOs working for Medicare beneficiaries.

A third option would be to negotiate benchmark prices. As a national negotiator, Medicare could establish discounted prices for prescription drugs; plans and beneficiaries would be guaranteed that they could obtain medications at these prices. But if plans were able to negotiate even lower prices, they would be free to do so.

However it does so, Medicare should take control of drug prices.

Sometimes, it's fun to bargain one–on–one to drive the car salesman crazy, or to engage in the give–and–take of purchasing gifts when you're in a faraway place. But sometimes it makes a lot of sense to let a big purchaser bargain for you.

If it were free to bargain, Medicare could cut a better deal for people with Medicare coverage and for American taxpayers.



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