Fix the cost of medication or lose the business

Monday, August 12, 2019

The high cost of prescription drugs and that market’s maddening complexity have become almost more than the private sector can bear.

A fight taking place in Washington right now is over how much control the federal government should exert over the prices of drugs that Medicare buys for its millions of clients.

Under the famous agreement that George W. Bush made to fund Medicare Part D more than a decade ago, Medicare was barred from negotiating drug prices. This was done because Medicare all by itself is the biggest buyer of drugs in the world, and it would be able to essentially dictate the price of prescription drugs.

Drug makers have threatened in response that they’ll refuse to sell drugs to Medicare if they can’t negotiate a fair price for them. The ability to refuse to sell, just like the right to refuse to buy, is a key component of negotiation.

Bills offered by Democratic U.S. senators, including Sherrod Brown of Ohio, would require drugmakers to negotiate under a gun.

If drug makers refuse to sell a drug at what Medicare considers a fair price, the federal government would be able to award a license to a competing drug maker to make that same drug as a generic at a price that Medicare considers fair.

The Republican-controlled Senate is balking at the government taking over the prescription drug business.

But the Senate cannot refuse to act. Nor can President Trump, who has promised to find ways to address the high cost of prescription drugs, if he wants to have a record of legislative success to run for re-election on.

The President has attempted a rule requiring drug prices to be posted in advertisements, just like in car ads. A federal judge blocked it.

The administration withdrew a proposed rule to pass savings from manufacturer rebates on to Medicare recipients when it was determined that the policy would contribute to higher premiums for senior citizens.

Bringing sanity, access, cost control, and transparency to the prescription-drug market demands a more vigorous role for the government. There’s just no way around it.

A Republican bill pending in the Senate would add an out-of-pocket maximum for beneficiaries. And it would penalize pharmaceutical companies if the price of their drugs rise faster than inflation.

We are told that would lead to lower costs for seniors on Medicare by adding an out-of-pocket maximum for beneficiaries at $3,100 starting in 2022.

The public is demanding action. A poll by Kaiser Family Foundation found 90 percent support for listing the prices of drugs in advertising and 86 percent in favor of allowing the government to negotiate drug prices for Medicare.

The pharmaceutical industry is set to have its wings clipped, eventually, and should negotiate a program that brings some predictability and reasonable pricing to the cost of prescription drugs. The alternative is, quite simply, creeping expropriation of the industry.

— The Toledo Blade

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