Why the Government SHOULD NOT Negotiate Drug Prices

Why the Government SHOULD NOT Negotiate Drug Prices

The government successfully negotiating drug prices is about as probable as a Florida Gator fan wearing an Ohio State jersey to tonight's championship football game.

If naysayers of the current market-based system for drug pricing say it isn't working, they should look at the numbers. The cost of Medicare's new prescription drug benefit has come down about 10 percent in the last six months. Most importantly, seniors on Medicare's prescription program are allowed to receive any medication their doctor prescribes to them, and they receive them at a lower cost.

All of this would change if the government starts negotiating drug prices as the Democrats are proposing. And why is that?

First, negotiating and changing the market-based system would also slow the research and development of new medications. Drug companies pour millions of dollars into research for the next breakthrough drug that could target cancer cells, reduce hypertension, fight cardiac disease, etc. Permitting government price setting for drugs marketed to the over 40 million Americans covered by Medicare would destroy innovation in this country. Instead of stifling drug innovation as federal price controls would, the current system that allows the market to hold down cost to the beneficiary while returning value for innovation is a preferable approach.

Secondly, the Democratic approach would affect where a senior gets their medications. The local pharmacy where seniors have gone for years to pick up their medications and talk directly with a pharmacist could be severely curtailed in favor of mail-order delivery. The federal government will attempt to squeeze every dime it can out of pharmacies as well, not really understanding how pharmacies operate in the private sector. Medicaid, at least on a state-by-state basis, directly negotiates with drug manufacturers and sets limits for pharmacy reimbursement. I constantly hear from independent and community pharmacists that say this is killing their businesses and hurting their customers. Allowing Medicare to do this will probably be the last nail in their coffins. Seniors want dependability, familiarity and personal attention to their health care needs. With local pharmacists they receive this kind of care. With new government negotiations, we will see a push for impersonal, automated systems.

The government should stay out of your grandmother's medicine cabinet.

http://burgess.house.gov/News/DocumentSingle.aspx?DocumentID=55088