When you're one of the biggest buyers of pharmaceuticals on the planet, you should have a big stick to negotiate the best prices.
Medicare, which insures more than 60 million beneficiaries, doesn't have that power, mostly because Congress stopped it from getting the best drug prices years ago. But that could change.
The anti-consumer poison pill was embedded in a law ironically called the Medicare Modernization Act. Among other things, it put corporate Pharmacy Benefit Managers (PBMs) in charge of acquiring drugs through Medicare's "Part D" plan.
On paper, getting middlemen to do the job of the government seemed like a good idea, but it didn't guarantee that Medicare beneficiaries would get the lowest prescription costs.
After all, PBMs are for-profit companies. They had to take their cut at the expense of retirees. They only had so much bargaining power.
The recently introduced Medicare Negotiation and Competitive Licensing Act would put Medicare directly in charge of demanding the lowest drug prices.
“Current law is based on the idea that middlemen called PBMs can do a better job negotiating lower drug prices than the government,” said David Mitchell, a cancer patient, Medicare beneficiary, and President of Patients For Affordable Drugs.
“If that were true, Americans would not be paying two to three times what people in other countries with direct negotiations pay. It’s time to change the law.”
Although free market advocates counter that drug companies compete against other to provide low prices, the industry is protected by patent laws and consistently fights low-cost, generic competition. Pharma companies can lock in some of the highest profits of any industry -- for years.