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Consumer Confidential: Drugmakers see disaster in Medicare negotiating prices. Don't listen to them

David Lazarus, Los Angeles Times on

Published in Business News

The pharmaceutical industry, bizarrely, told the American people this week that allowing Medicare to negotiate drug prices is tantamount to socialism, rather than an example of a healthy, competitive marketplace.

The industry said in an open letter to Congress that letting Medicare haggle on behalf of its 63 million beneficiaries would give the government "the power to set the price of medicines."

Leaders of nearly two dozen drug manufacturers said that while they share Americans' concerns over healthcare costs, "these dangerous policy experiments are not the answer."

Dangerous policy experiments? Nearly every other developed country worldwide allows its government insurance system to negotiate drug prices.

And guess what? This reasonable use of market power allows people in other countries to pay roughly half what Americans pay for prescription meds.

That's what Democratic lawmakers are trying to address with legislation that would add dental and vision coverage to Medicare, as well as finally allow the program to negotiate prices with drug companies — a common-sense move long opposed by Republicans.

 

Not all Dems are on board with the idea. Several Democratic lawmakers on the House Energy and Commerce Committee, including Rep. Scott Peters of biotech-heavy San Diego, voted down the price-negotiation proposal on Wednesday.

But the provision subsequently made it through the House Ways and Means Committee, keeping it in the legislation for now.

"There's absolutely no reason for the government not to be negotiating drug prices," said Anirban Basu, a professor of health economics at the University of Washington.

"Every economist thinks this should happen," he told me. "All other countries do it."

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