When you are one of the world’s largest purchasers of pharmaceuticals, shouldn’t you be able to negotiate lower prices based on purchase volume like any other large customer? That’s a standard business practice, a “given.”
But although Medicare and the Veterans Administration purchase medicines for almost 80 million Americans, they are prevented from being treated like other volume purchasers. And it’s all perfectly legal.
The congressional godfather of this restrictive practice is former Congressman Billie Tauzin, R-La. In 2003 Tauzin coauthored this discriminatory legislation at the very same time he was negotiating behind the scenes with the drug industry to head up its Washington lobbying organization at $2 million a year. And guess what? He got the job. It should also be interesting to take note of who was president then. Tauzin wound up president of PhRMA, the lobbying organization for the powerful American pharmaceutical industry. Talk about quid pro quo!
Most Democrats and a few Republicans argue the fact that Medicare Part D’s 42 million purchasers (29% of the total) should give them the power to negotiate lower prices like any other large customer. But by a law passed by your and my congressional representatives they cannot. This blatantly restrictive anti-consumer legislation was embedded/disguised in a bill euphemistically called the Medicare Modernization Act. Who do they take us for, the fools that we apparently are?
Among other things, this law put Medicare Part D’s drug acquisition under the control of Pharmacy Benefit Managers. In theory maybe assigning middlemen to do certain jobs might seem efficient and business-like to some people. But it didn’t necessarily mean Medicare patients would get fair prices. PBMs are for-profit organizations and took their cut at the expense of Medicare recipients. I am a dyed-in-the-wool proponent of free-market capitalism, but this is overstepping it a bit.
Recently legislation introduced by the Democrats would put Medicare in charge of negotiating favorable prices, but Republicans, naturally, oppose it. And pharmaceutical industry spokesmen argue that their companies are already in competition with one another and naturally generate lower prices among themselves.
But the industry is well protected by patent laws and aggressively neutralizes most low-cost and generic competition. If conventional competition were effectively working Medicare beneficiaries would not be paying three times or more what people in other countries with price negotiation rights pay for their medications. Citizens of countries with national health care buy medications at a fraction of what we pay. Doesn’t the fact that we can buy prescription drugs by the same name, the same manufacturer in the same boxes across the border in Canada and Mexico at a fraction of the U. S. prices tells us something? Big Pharma says these overcharges are used to pay for research and development. But that’s another lie. The Federal Government pays a substantial part of the R & D costs and much of it is done in the labs of tax-supported state universities.
The simple facts are these: The pharmaceutical industry doesn’t want its largest customer to have the same price negotiation rights as other customers. And it commands the most powerful lobby in Washington. Any questions? And when was the last time you wrote to your congressional representative about our exorbitantly high and unfair drug prices?