I have written before about the idea of allowing Medicare to negotiate drug prices. I have said it will require stricter formularies as part of the negotiations or it will be price setting.
What is being proposed is price setting and not just for Medicare, but for plans in the commercial market.
Keep in mind the companies that provide Part D Medicare benefits and for many private employers already negotiate discounts and rebates from pharmacy companies so for Medicare to actually save significantly, the new prices must be lower than those discounted prices.
What is actually saved is important because those projected savings are going to be spent elsewhere (so nothing is being saved in any case, just moved from here to there).
“The word ‘negotiation’ sounds extremely reasonable, but we are not talking about negotiation ,” Kenneth Frazier, executive chairman of Merck & Co., said on a call with reporters this week. “The [HHS] secretary gets to propose prices to the industry and if the industry does not ultimately agree to those prices, there’s a penalty of 95% [of the sales of a drug]. It is in fact a substitute for the word price controls.” Source Wall Street Journal.
We all want affordable medication, we also want new and better drugs, and we want drugs that help people with rare conditions. How far this pseudo quest for savings negatively impact those goals remains to be seen. Let’s hope when we see it that it is not too late.