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 returns to medical innovation will not be as great, and it could cause innovation to slow," Barkowski said.

Slow, perhaps, but not disappear.

The CBO estimates that out of 300 new drugs expected to be approved in the U.S. over the next decade, allowing Medicare to negotiate prices could lower that total by eight drugs.

Eight. Out of 300.

Not the worst odds you'll ever face.

"That's an innovation reduction of less than 5%," said Basu at the University of Washington. "That means more than 95% of current innovation would continue."

It's all about getting the most bang for our healthcare bucks. Right now, Americans spend about twice as much for healthcare as citizens of other developed countries.

A big reason for that is Medicare being forced by drugmakers to cover prescription meds on a take-it-or-leave-it basis — pay what we want or no soup for you.


"When Medicare pays more for a drug than it is worth, the extra money it spends on the drug could have been spent on other treatments," observed Jeffrey Hoch, associate director of the Center for Healthcare Policy and Research at UC Davis.

"This concept is clearly understood in other countries," he said. "This is why their healthcare systems encourage the use of negotiations."

As stated above, it's all about structuring things so we can achieve fairness for all concerned. The smart play, I imagine, is to create a nonpartisan, Federal Reserve-like entity that can approach Medicare drug pricing (and, perhaps later, "Medicare for all") with impartiality.

The drug industry wants you to think a government takeover of the pharmaceutical industry is in the works. It isn't.

The only thing Democratic lawmakers are proposing, other than making Medicare more effective with dental and vision coverage, is to employ well-established, capitalistic, free-market economics — namely, buyers and sellers collaborating to reach a fair price.

In their letter to Congress, the drug companies call their industry "the envy of the world." That's certainly true of the amazing products they create.

It's absolutely not the case when it comes to how much they charge.

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