Democrats Lose on Having Medicare Negotiate Drug Prices

The failure of the Democrats to win authority for Medicare to negotiate drug prices is an inexcusable defeat. Anyone who is even modestly up on this issue knows that the scary problem with burgeoning entitlements isn’t Social Security, it’s Medicare, and Medicare is out of control because our whole health system is run for the benefit of providers. And despite the drug industry’s Microsoft-like protests that it needs to make tons of money so it can invent new drugs, 88% of the so-called new drug applications (the name of the FDA process for getting drugs approved) were for other uses of existing drugs. In most cases, doctors were already prescribing drugs for these conditions (which is called “off-label use”).

The benefit to the drug companies of these NDAs? They allow Big Pharma to market drugs for these applications, as opposed to have doctors hear of it via word of mouth or reading research.

From the “>New York Times:

A pillar of the Democratic political program tumbled today when Republicans in the Senate blocked a proposal to allow Medicare to negotiate lower drug prices for millions of older Americans, a practice now forbidden by law.

Democrats could not muster the 60 votes needed to take up the legislation in the face of staunch opposition from Republicans, who said that private insurers and their agents, known as pharmacy benefit managers, were already negotiating large discounts for Medicare beneficiaries….

Republicans framed the issue as a choice between government-run health care and a benefit managed by the private sector. The drug benefit is delivered and administered by private insurers, under contract to Medicare.

Senator John Cornyn, Republican of Texas, denounced the bill as “a step down the road to a single-payer, government-run health care system.”

Democrats said they were merely trying to untie the hands of the secretary of health and human services, so he could negotiate on behalf of 43 million Medicare beneficiaries.

“The Department of Veterans Affairs is able to negotiate for lower-priced drugs,” said the Senate majority leader, Harry Reid, Democrat of Nevada. “H.M.O.’s can negotiate. Wal-Mart can negotiate. Why in the world shouldn’t Medicare be able to do that?”…..

Kash Mansouri’s comment at The Street Light:

I really can think of no general economic benefit of the current rules, which create a fairly straightforward transfer of money from US taxpayers to pharmaceutical companies. It seems to me very similar to an industry subsidy, though a hidden one that is not explicitly on the government’s books. Why the pharmaceutical industry needs a government subsidy is unclear to me.

But of course, I suppose that such reasoning does mean that there is substantial economic rationale for the status quo if you’re a pharmaceutical company…

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