Wednesday, November 15, 2006
Editorial: A drug plan for the people
Medicare Part D was written to benefit drug makers, not consumers. A new Congress can, and should, do better.
From the RoundTable blog
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The Bush administration doesn't see room for compromise with a newly Democratic Congress on the issue of allowing Medicare to negotiate lower drug prices for Part D recipients.
Michael Leavitt, secretary of health and human services, is right when he says the two approaches are incompatible.
"We are seeing large-scale negotiations with drug manufacturers, but they are conducted by private drug plans, not by the government," Leavitt told The New York Times. "A robust marketplace with a lot of competitors has driven down prices. It's the magic of the market. To assume that government, in our genius, could improve on this belies the reality of a complex task."
But Dean Baker, an economist with the Center for Economic and Policy Research, disagrees.
He believes that if the federal government administered the prescription drug benefit and negotiated with drug companies directly, the savings would be about $800 billion over the next 10 years.
Enough money would be saved, Baker wrote, "to completely cover seniors' drug needs, eliminating co-payments, deductibles, premiums or gaps in coverage."
This is the difference between a drug benefit plan written to benefit drug companies and a drug benefit plan written to benefit patients.
The old Congress gave us the former. The bill stank so bad that the GOP leadership in the House had to hold voting open an unprecedented three hours to browbeat enough Republicans to get a majority.
Well, there's a new Congress coming in, with new leadership that's not as beholden to the pharmaceutical industry.
Rewriting the law to give Medicare the right to negotiate for lower drug prices was one of soon-to-be-House Speaker Nancy Pelosi's top priorities.
She can do better, though, than the Democrats' current proposal, which would simply add a government-run plan to all the private-sector plans and give Medicare the ability to negotiate prices for the government-run plan.
That would fragment the consumer base and dilute the government's negotiating power.
It would be better to start from scratch. Write a new drug benefit bill that would eliminate all the confusing private plans in favor of a far more efficient single-payer model. The Congressional Budget Office estimates that a centralized system alone would save $50 billion in administrative costs in the first 10 years.
With every Medicare patient as a potential customer, the government would have enormous negotiating clout that would translate into billions of dollars -- hundreds of billions of dollars, even -- of savings.
That's what a bill written for the people rather than for the special interests would look like.
