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Just give Medicare and Medicaid the ability to negotiate and publish what they pay for drugs. Right now they are forced to accept a (self reported) average mark

Just give Medicare and Medicaid the ability to negotiate and publish what they pay for drugs. Right now they are forced to accept a (self reported) average market price for every drug they buy. They buy over half the prescription drugs in this country. They can be a bully and negotiate great prices for themselves. And once the prices are public, see if any insurance companies are willing to accept a 5000% premium over the Medicaid price.

refurb 11y ago
Medicaid and Medicare are very different beasts. Medicaid takes 23.1% off the top of most drugs and typically pays the least out of any insurer (including the private ones). There is even a "best price" provision that says Medicaid either gets a hefty discount or best price, whichever is lower. I wouldn't worry about Medicaid. Medicare (for physician administered drugs) pays the average of all the private payers, which isn't a bad way to do it. For prescription drugs, it pays list price, except for the Part-D private plans which already negotiate. To be honest, allowing Medicare to negotiate is a little bit like any company "negotiating" with the gov't. It's a take it or leave it proposition and is a more like "price by fiat" than a negotiation. Having the federal gov't negotiate drug prices is not necessarily a panacea. The largest US insurance companies cover 30-40M lives, that larger than the population of Canada. Yet, they pay more for drugs than Canada does. You know why? Because the Canadian gov't makes them (back to the "price by fiat").
- dangerlibrary 11y ago
  You're right about Medicaid paying the least and having very favorable pricing in general. Also repayment rates vary wildly by state, etc. But the baseline rates are still based off the reported average price. Drug manufacturers know that the government will always pay some fraction of sticker price, regardless of the volume the average price is based on. CMS can't negotiate in the face of these dramatic price hikes. And yeah, it's price by fiat, through the market. Welcome to government contracts - plenty of people have become very rich in this space, and I have no sympathy to those that complain about their slim profit margins on incredibly high volume transactions. It's a big job. Get rich doing it, or get out of the way for someone who will, because it's got to get done.

refurb 11y ago

Medicaid and Medicare are very different beasts. Medicaid takes 23.1% off the top of most drugs and typically pays the least out of any insurer (including the private ones). There is even a "best price" provision that says Medicaid either gets a hefty discount or best price, whichever is lower. I wouldn't worry about Medicaid. Medicare (for physician administered drugs) pays the average of all the private payers, which isn't a bad way to do it. For prescription drugs, it pays list price, except for the Part-D private plans which already negotiate. To be honest, allowing Medicare to negotiate is a little bit like any company "negotiating" with the gov't. It's a take it or leave it proposition and is a more like "price by fiat" than a negotiation. Having the federal gov't negotiate drug prices is not necessarily a panacea. The largest US insurance companies cover 30-40M lives, that larger than the population of Canada. Yet, they pay more for drugs than Canada does. You know why? Because the Canadian gov't makes them (back to the "price by fiat").

dangerlibrary 11y ago
You're right about Medicaid paying the least and having very favorable pricing in general. Also repayment rates vary wildly by state, etc. But the baseline rates are still based off the reported average price. Drug manufacturers know that the government will always pay some fraction of sticker price, regardless of the volume the average price is based on. CMS can't negotiate in the face of these dramatic price hikes. And yeah, it's price by fiat, through the market. Welcome to government contracts - plenty of people have become very rich in this space, and I have no sympathy to those that complain about their slim profit margins on incredibly high volume transactions. It's a big job. Get rich doing it, or get out of the way for someone who will, because it's got to get done.