Families USA is a national nonprofit, non-partisan organization dedicated to the achievement of high-quality, affordable health care for all Americans.
They just issued a Report as House of Representatives Is Scheduled to Vote Soon to End Prohibition Preventing Medicare from Bargaining for Lower Drug Price that shows Medicare Drug Plan Prices Are 58 Percent Higher than VA Prices
For all of the top 20 drugs prescribed to seniors, VA prices were substantially lower than the lowest prices charged by the Part D insurers, according to the report. The median price difference was 58 percent. In other words, for half of the 20 drugs, the lowest price charged by the Part D insurers was at least 58 percent higher.
“Opponents of Medicare bargaining make two contradictory claims. First, they claim that private market competition under Part D is more effective in reducing prices than Medicare bargaining; and second, they claim that Medicare bargaining would reduce prices so significantly it would harm research and development,� said Pollack. “These arguments cannot both be true—and, indeed, neither is true.�
Using numbers the major drug companies have publicly submitted to the Securities and Exchange Commission (SEC), the Families USA report rebuts the assertion that Medicare bargaining would harm research and development (R&D). According to the report, the largest U.S.-based drug companies spent more than twice as much on marketing, advertising, and administration as they spent on R&D (13.9 percent versus 32.0 percent of revenues), and they retained more in profits than they spent on R&D (17.4 percent versus 13.9 percent).
In 2005, for example, Pfizer spent 2.3 times as much on marketing, advertising, and administration as on R&D (33.1 percent versus 14.5 percent of revenues). Merck spent 1.9 times as much on marketing, advertising, and administration as on R&D (32.5 percent versus 17.5 percent of revenues). Abbott Laboratories spent 3.0 times as much on marketing, advertising, and administration as on R&D (24.6 versus 8.2 percent of revenues). The Families USA report’s pricing data were for November 2006 as reported by Part D plans to the Centers for Medicare and Medicaid Services (CMS), as listed on the CMS Web site (www.medicare.gov). VA pricing information was obtained from the VA’s price schedules.
I think that the government should let market forces determine the lowest prices on goods and services. And intervene only when there are obstacles to free markets. Allowing the government to impose prices is a last choice..
But what most interests me is why the five companies with the largest enrollment in Medicare Part D are not able to negotiate prices as low as the VA can? Are they not allowed to work together? Are they being played off of each other by the Drug companies? How is the free market kept from working?
Born 1950, Married, Living in Austin Texas, Semi
Retired Small Business owner and investor. My political interest
evolved out of his business experience that the best decisions come out of an objective gathering of information and a pragmatic consideration of costs and benefits. I am interested in promoting Centrist candidates and Policies. My posts are mostly about people and policies that I believe are part of the solution rather the problem.