Confront Rising Drug Prices

Isaiah J. Poole

The outlook for prescription drug costs, and for health care costs generally, continues to be ominous. Price increases of more than 100 percent for certain prescription drugs means it is more important than ever to give the Medicare program the power to bargain with drug companies for the best price, so that seniors and taxpayers don’t bear an unfair burden because of these price hikes.

The latest Making Sense alert calls for getting this issue back on the front burner of the political debate, and it comes as researchers at the University of Minnesota report that prices of some drugs have gone up well over 100 percent, and in a few cases over 1,000 percent, in the past year.

Cost increases like these are already expected to have a ripple effect on private insurance premiums. An Aon Consulting report released this week projects that health care costs will be up 10.6 percent next year, increases that will be reflected in the health insurance premiums that people can expect to pay next year.

Even in the face of these cost increases, conservative lawmakers still oppose a commonsense policy shift that would simply allow Medicare to do what other government agencies that provide health care are able to, including the Department of Veterans Affairs, the Department of Defense, the Public Health Service and the Bureau of Prisons.

Because federal negotiation is prohibited, elderly Americans are being overcharged billions of dollars. Agencies that negotiate get much better drug prices than the private Part D insurance plans do. If Medicare was allowed to negotiate with manufacturers, the program would save approximately $90 billion a year, which could be passed along to the elderly in the form of lower costs or greater benefits.

From 2002 to 2007, prescription drug prices increased by 50 percent, more than 2½ times faster than inflation. Eight in 10 Americans think that the cost of prescription drugs is too high, and four in 10 report struggling to pay for medication prescribed by their doctors.

Sens. Amy Klobuchar, D-Minn., and Charles Schumer, D-N.Y., have asked the Government Accountability Office to investigate these drug price increases. That is an urgently needed first step. But while that investigation is happening, we should be asking candidates where they stand on allowing the Secretary of Health and Human Services to negotiate fair prescription drug prices or on creating a real Medicare prescription drug plan (one actually run by Medicare) that forces drug companies to compete to provide drugs at the lowest price.

Eighty-seven percent of Americans support “a proposal to allow Medicare to use its bargaining power to negotiate prescription drug prices with manufacturers.” Lowering Medicare drug costs – and reducing the influence of the drug industry—is critical to bringing skyrocketing prescription drug and health care costs under control for all Americans.


More detail on this topic is in our Making Sense alert on the Medicare prescription drug benefit.

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