By Dean Baker and Nicole Woo
Center for Economic and Policy Research (CEPR), March 2013
Americans pay far higher prices for prescription drugs than do people in other wealthy countries. The reason that other countries spend so much less on drugs is that their governments negotiate prices with the pharmaceutical industry. The United States government could adopt the same approach with the Medicare drug program and use its market leverage to negotiate the same, or even lower, prices as are paid by other wealthy nations. This issue brief finds the potential savings to states would be enormous, cumulatively between $31 billion and $73 billion over 10 years, and also each state individually could expect significant savings. California leads the way, with potential savings between $3.3 and $7.8 billion. The next six top-saving states are Florida, New York, Texas, Pennsylvania, Ohio and Illinois, all with projected savings of at least $1 billion per year.
http://www.cepr.net/index.php/publications/reports/state-savings-with-an-efficient-medicare-prescription-drug-benefit
Comment:
By Don McCanne, M.D.
Those who have followed health policy closely are already aware that we could have had much lower drug spending in the Medicare Part D drug program had we authorized government price negotiation with the pharmaceutical industry, just as other governments have done so successfully. This new report from CEPR puts a price on the waste that we tolerate merely because we don’t place demands on our legislators to fix the system.
Think about this a little bit more. If we demanded government price negotiation not only for those of us enrolled in the Part D Medicare program, but for all of us who need prescription medication, just think of how much more reasonable our pharmaceutical spending would be. We could do this simply by adopting a single payer, improved Medicare for all program.
But the drug savings would be only the beginning. By now, most of you are aware of the many other single payer policies that would produce enough total savings to ensure high-quality care for all of us, while making our health care delivery system affordable for the entire nation. Why are we not beating down the doors of Congress?