The illusive promise of savings from Medicare negotiating drug prices

First, pharmacy benefit managers operating Part D of Medicare already negotiate drug prices and do so by leveraging formularies. I will give you a better price if you make it more desirable for patients to use the drug I make among alternatives in the same class of drugs.

Will Medicare get a better deal, How? Stricter formularies? How much can actually be saved? Or, is “negotiate” a misnomer and are we really talking about setting prices? If so, what are possible consequences?

Then instead of capturing all projected savings, politicians want to use assumed savings to create yet another ongoing, growing liability in the form of additional coverage. There is no guarantee savings will continue to cover the cost of coverage for dental care, hearing, and vision.

And, there is no way of substantiating the savings in future years.

House Democrats on Thursday pushed through legislation that would empower Medicare to negotiate prescription drug prices and offer new benefits for seniors. The vote comes as the House Judiciary Committee considers articles of impeachment against the president.

The bill would cap Medicare recipients’ out-of-pocket costs for medicines at $2,000 a year. It would use about $360 billion of its projected 10-year savings from lower drug costs to establish Medicare coverage for dental care, hearing, and vision, filling major gaps for seniors. Source: CBS News

2 comments

  1. If you substitute the word “profits” for the word “savings” in your sentence “instead of capturing all projected savings, politicians want to use assumed savings to create yet another ongoing, growing liability in the form of additional coverage”, it will remind you of another epic failure. Enron was using Mark to Market accounting (MTM) which is what the politicians want to do here. Enron was permitted to log estimated profits as actual profits and they just ran out of money because there was no real actual money. Congress in this case wants Medicare to log “estimated savings” as “actual savings”. It is like people who spend a bonus or a tax refund before they even know how much that they are actually getting. The only true savings that any government can cut on is when they cut the programs.

    Enron was a several billion dollar failure. Expansion of Medicare will cost trillions.

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