Congressional Democrats' move toward Medicare negotiation with pharmaceutical companies over drug prices may not survive an anticipated White House veto, but the effort is worth making. Although private competition already has led to lower costs, the bulk-purchasing clout of the government was improperly restricted by the original drug-benefit legislation.
Now, seniors enrolled in Medicare Part D plans pay 58 percent more for the most commonly prescribed drugs than those who buy their medications through health plans administered by the Department of Veterans Affairs, according to a recent study by Families USA, a nonprofit health care consumer advocacy group.
Unfortunately, under the 2003 Medicare prescription drug law, the government is actually barred from harnessing the buying power of 22.5 million Americans. Strength in numbers cannot apply to Medicare drug-buying.
Veterans Affairs has been able to bring this sort of force and power to its members for a number of years. According to the study, VA plan costs are much lower. For example, for the cholesterol-lowering drug Zocor, the cost of a year's supply of 20 milligram tablets would be $1,485.96 under the cheapest Medicare Part D plan, compared with $127.44 under the VA plan.
Allowing the health and human services secretary that kind of leverage in negotiations just makes good business sense -- unless drug company profits count for more than medication costs for seniors.
Critics have countered that the government would actually be at a disadvantage in terms of the types of drugs it would be able to offer Medicare recipients. The basic assumption underlying that argument is that negotiators have to have the ability to walk away from a deal if the price is too high. But if they do, seniors would lose access to some drugs, restricting their choices, and their doctors' choices, of medications.
But negotiations aren't mindless, and pharmaceutical firms have an inherent interest in protecting their right to sell a full range of their drugs. What is likely to erode is the level of profit, not profit itself.
True, lower profits could cut research budgets and inhibit the quest for new drugs. But the government is already supporting drug research in many ways, seeking not only better health for Americans but less-costly treatments than hospitalization and surgery. Cost is a critically important issue for those who receive Medicare benefits -- the driving factor behind the Part D legislation in the first place. Volume-driven negotiation would offer a more complete approach to that problem, and curtail a flaw in the original law.
Realistically, it is unlikely President Bush will sign any bill allowing Medicare to negotiate with pharmaceutical companies. This administration has bowed too deeply to the pharmaceutical companies to straighten up at this point. But Congress is right to make the effort.