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  • 11/21/2006
Yesterday the New York Times published a few letters pertaining to the issue of Medicare reform and specifically the issue of non-interference.

My letter, alas, was not chosen. (My mother-in-law was very upset.)

Here is what I wrote:

To the Editor:

Your editorial (Lowering Medicare Drug Prices, November 14, 2006) suggests that the Veteran’s Administration “negotiates” prices for prescription drugs. Not so, it mandates them – and that’s more than a rhetorical finesse.

Under rules set by Congress, to sell drugs to the VA, companies must offer each drug at a price that “represents the same discount off a drug’s list price that the manufacturer offers its most-favored nonfederal customer under comparable terms and conditions.” The medication must be offered “at a discount of at least 24 percent off [the] nonfederal average manufacturer price (NFAMP). An excess inflation rebate is also required, equal to the percentage by which the price increase for [the] drug has exceeded the consumer price index (CPI) in the prior period.” The manufacturer must make all of its drugs available through the Federal Service Schedule for any of its drugs to be eligible for reimbursement under the VA and Defense Department health systems, the Public Health Service (including the Indian Health Service), the Coast Guard, and the various state Medicaid programs.

A study by Professor Frank Lichtenberg of Columbia University found that the majority of the VA formulary’s drugs are more than eight years old and more than 40 percent are 16 years old or more. Just 19 percent of all prescription drugs approved by the FDA since 2000 are available to veterans; only 38 percent approved during the 1990s are.

There’s a big difference between negotiating and mandating – and it’s not a thin line. My fear is that a government negotiated Part D plan is but the first step towards a more strident program of government price controls.


Peter J. Pitts
Center for Medicine in the Public Interest

Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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