5 ms·
No, it’s not. Medicare is legally restricted from negotiating drug prices. Yes, that’s a ridiculous law. Edit: to clarify, Medicare does not only cover seniors
by arkades 7y ago
No, it’s not. Medicare is legally restricted from negotiating drug prices. Yes, that’s a ridiculous law.
Edit: to clarify, Medicare does not only cover seniors. Other important groups include those with end-stage renal disease and those with significant disabilities. Those often also receive Medicaid, and are known in industry jargon as “dual-eligible.” Medicare becomes their primary payor, with Medicaid picking up the balance of what Medicare won’t cover. Both programs are ultimately overseen by CMS (center for Medicare and Medicaid services). Pay negotiations for Medicaid occur on a state level, but a huge chunk of the tab is picked up federally, so they tend to weigh in.
Newborns with SMA will almost certainly be initially covered by parental private insurance (pre-dx), and transition to dual coverage afterwards. Please note that there are a combination of gene therapies under discussion, only one of which will be given once at birth- the rest will entail ongoing costs that will be borne by Medicare and Medicaid.
- tareqak 7y agoThanks for that 'arkades: I'll update my comment to add "in theory".
- phkahler 7y agoI dont think any insurance company should be able to negotiate prices.
- tareqak 7y agoMight I ask why not? On a personal level, I don't like negotiating myself e.g. I don't like stores that have posted prices. On a macro level, negotiating prices is how large transactions clear such that the buyer and seller get something closest to what they want (hopefully). I do think sane ceilings and floors ceilings for prices have a place in certain situations, but I wouldn't be the best person to characterize what this sanity would be.
- will_brown 7y ago>Medicare is legally restricted from negotiating drug prices. Why would Medicare negotiate rates for a therapy for infants/children (even if they had the legal right)?
- wombatpm 7y agoMedicaid (for children and financially disadvantaged people ) is a state level program that is bolted onto Medicare. The Federal agency that oversees both is the CMMS Center for Medicare and Medicaid Services
- will_brown 7y agoFYI at least some state Medicaid programs do infact negotiate drug prices, unlike Medicare.
- tareqak 7y agoTo bring down the cost? I'm confused as to what you are getting at: are you trying to say that if a therapy of infants and children exists at some cost determined by the producer of the therapy that Medicare is obliged to pay that price immediately and perform that therapy on the affected infants/children? In my understanding, certain procedures already have to go through some kind of approval before being eligible to be covered by Medicare in addition to FDA approval (I might totally be wrong here). Medicare negotiating the price would be an additional step. Update: Replies (I reached the maximum nesting level): 'chimeracoder: Thanks! I appreciate it. I keep forgetting that Medicare only applies to seniors. I guess individual insurance companies or the parents of the affected infants would be the ones to try to negotiate the price of this treatment then.
- chimeracoder 7y ago> To bring down the cost? I'm confused as to what you are getting at: are you trying to say that if a therapy of infants and children exists at some cost determined by the producer of the therapy that Medicare is obliged to pay that price immediately and perform that therapy on the affected infants/children? Medicare, with only a few exceptions[0], only covers people above a certain age (typically 65+). The original article is about a disease that affects infants. Almost no infants are eligible for Medicare. [0] none of which apply here
- tryptophan 7y agoIts not ridiculous. How can you "negotiate" when you have 0 leverage? There is no "negotiation", ever. Even calling it that is disingenuous because it implies that some low cost could be reached if it were not for those darn evil corrupt capitalists. To illustrate how absurd it is, think of a scenario in which a woman with a gun robs a jewelry store and then boasts she got a 99% discount due to her "negotiation" skills. The clerks have 0 leverage in that situation, so it is not a "negotiation" in any way. The only option the company has is to sell. If they don't, they lose all their investor money and go bankrupt. The reason other countries get away with obscenely low prices is because the good'ol USA is paying for it, and the companies are better off getting anything other than 0. If you look at how well industries are doing, you would also see that you would actually make more money investing in a burger chain than in the pharma sector. These high prices exist because of the incentives the insurance model creates (i.e. save people at any cost), not because companies are super greedy or evil and make 1.99$ million profit on a 2$ mill drug(which they do not).
- tareqak 7y agoThat doesn't make sense to me. Why would a company sell anything at a loss without some kind of complementary benefit? That's something that would lose all their investors money and have the company go bankrupt. The companies have some leverage. They can hire PR firms to basically say, "Our new drug X treats disease Y. Your country Z doesn't want to pay to help those suffering from Y". If people afflicted by Y can garner enough influence to pressure their government's health department to get X, then they might get that. If you want proof whether or not big pharmaceutical companies lose money by selling to countries outside the US, then try to find out if they would support a bill that forbids US pharmaceutical companies from selling at a price below what they charge Medicare. The comparison to a burger chain is interesting: I remember reading that McDonald's makes money from real estate as opposed to burgers here on HN a while back [0][1]. [0] http://blog.wallstreetsurvivor.com/2015/10/08/mcdonalds-beyond-the-burger/ http://blog.wallstreetsurvivor.com/2015/10/08/mcdonalds-beyo... [1] https://news.ycombinator.com/item?id=14158772 https://news.ycombinator.com/item?id=14158772
- deleted 7y ago[deleted]
- chimeracoder 7y ago> No, it’s not. Medicare is legally restricted from negotiating drug prices. Yes, that’s a ridiculous law. This misleading misconception gets brought out on nearly every discussion of pharmaceuticals on Hacker News. Medicare doesn't negotiate rates; the insurers who provide Medicare coverage for pharmaceuticals negotiate rates. This makes sense, because Medicare doesn't provide coverage for pharmaceuticals, so it would be a misalignment of incentives to have them "negotiate" rates that they're not paying. The insurers, on the other hand, have the incentive to drive the prices as low as possible, because pharmaceuticals are fungible goods and the lower the price, the more money they can make.
- rayiner 7y agoHoly shit I never even realized that.
- arkades 7y agoIt's not misleading at all. Prior to the 2003 Medicare Prescription Drug, Improvement, and Modernization Act the federal government did negotiate drug prices. Although it had less skin in the game than Part D pharma plans, it had far more market power, and the resultant leverage made it much more potent. Additionally, it's outright incorrect to suggest it doesn't have skin in the game - it not only covers the most expensive (and biggest growth sector) in pharmaceuticals, those administered in infusions and inpatient centers (the biologicals; chemo), but they also pick up a chunk of the Medicaid spending, which covers pretty much everything. It wasn't pharma benefit managers (PBMs) that surpassed all other industry groups in lobbyingfor the final form of the 2003 Act - it was pharma companies (Ceci Connolly, Drugmakers Protect Their Turf: Medicare Bill Represents Successfor Pharmaceutical Lobby, WASH. POST, Nov. 21, 2003). They hadn't lost track of their own interests and accidentally lobbied against their own profits, and it's always kind of ridiculous when people imply they did.