Allowing the Federal government to negotiate drug prices (Runaway Drug Prices, May 5, 2015) would result in prices going up and patient choice going down. That’s why the Non-Interference Clause, the legislation that prohibits Federal price negotiation was created in the first place. It’s interesting and important to note that the legislative language was drafted by Senators Ted Kennedy and Tom Daschle.
Is there a need to negotiate Medicare drug prices? The Congressional Budget Office found that between 2004 and 2013, Part D will cost an extraordinary 45 percent less than what was initially estimated and premiums for the program are roughly half of the government’s original projections.
These unprecedented results are largely due to Part D’s market-based structure. Beneficiaries are free to choose from a slate of private drug coverage plans, forcing insurers to compete to offer the best options to American seniors. It’s hardly surprising that the program has led to low prices and satisfied customers.
Through their own negotiations with drugmakers, private insurance plans that operate under Part D have already had great success in keeping pharmaceutical prices down. In fact, the CBO has observed that Part D plans have “secured rebates somewhat larger than the average rebates observed in commercial health plans.”
What’s more, the CBO has said that doing away with the non-interference clause “would have a negligible effect on federal spending.” In a report from 2009, they reiterated this view, explaining that such a reform would “have little, if any, effect on [drug] prices.”
In fact, allowing the feds to negotiate drug prices under Part D would likely have a negative effect on the program. The CBO predicts that when HHS forces pharmaceutical firms to lower the cost of a particular drug, this tactic brings with it “the threat of not allowing that drug to be prescribed.”
Senators Kennedy and Daschle knew what they were talking about. The President should pay close attention.
Peter J. Pitts
Pitts, a former FDA Associate Commissioner, is President of the Center for Medicine in the Public Interest