USA TODAY International Edition
Trump’s right, let Medicare negotiate with Big Pharma
Donald Trump has certainly gotten the pharmaceutical industry’s attention with his ruminations about drug prices. Within 20 minutes of last Wednesday’s news conference, in which the president- elect called for the government to negotiate directly with pharmaceutical companies, the industry shed roughly $ 25 billion in stock value.
Trump is nothing if not blunt, and in this case, he happens to be right. Drug companies are, he says, “getting away with murder. We’re the largest buyer of drugs in the world, and yet we don’t bid properly, and we’re going to save billions of dollars.”
As with many of Trump’s proposals, exactly what he has in mind is somewhat murky. But he has hinted at two things: jawboning the drug industry, much as he has done with defense contractors and manufacturers, and allowing the government to bargain directly with drug companies.
Medicare’s inability to negotiate over prices is one of the biggest tragicomedies in all of government. The situation stems from the 2003 law that created Medicare’s “Part D” drug benefit but mandated that the job of negotiating would be farmed out to myriad insurance companies that don’t have government’s pricing power to buy in bulk.
The argument used by Big Pharma and its congressional al- lies to sell this unusual procedure was — and we’re not making this up — that negotiating directly to save taxpayer money constituted Big Government.
It is time to drop this ridiculous pretense, and it can be done entirely separately from the GOP’s poorly conceived effort to “repeal and replace” the Affordable Care Act, also known as Obamacare.
Government wouldn’t refuse to negotiate directly over a new aircraft carrier or an interstate highway bridge. Why should it over drugs? When taxpayer money is involved, government should not spend more than it has to.
This is especially true for Medicare, which is expected to spend more than $ 1 trillion over the next decade on prescription drugs. Government should not pick winners and losers among individual drug companies. But it can and should use its leverage as the world’s largest purchaser of prescription drugs.
Estimates on how much money could be saved through direct negotiation vary, depending on how the negotiating would take place and who is doing the estimate.
The best estimate is from the non- partisan Congressional Budget Office, which said a plan by President Obama could save $ 121.3 billion over 10 years just from low- income beneficiaries.
Trump might be the one person who can challenge the powerful drug lobby and finally talk some sense into Republicans on this matter. He has changed the party’s doctrine for the worse on many issues, including trade and deficit spending.
Now is a chance for him to change doctrine for the better.