By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
Health Works CollectiveHealth Works CollectiveHealth Works Collective
  • Health
    • Mental Health
    Health
    Healthcare organizations are operating on slimmer profit margins than ever. One report in August showed that they are even lower than the beginning of the…
    Show More
    Top News
    improving patient experience
    6 Ways to Improve Patient Satisfaction Within Hospitals
    December 1, 2021
    degree for healthcare job
    What Are The Health Benefits Of Having A Degree?
    March 9, 2022
    custom software development is changing healthcare
    Digital Customer Journey Mapping and its Importance for Healthcare
    July 21, 2022
    Latest News
    Beyond Nutrition: Everyday Foods That Support Whole-Body Health
    June 15, 2025
    The Wide-Ranging Benefits of Magnesium Supplements
    June 11, 2025
    The Best Home Remedies for Migraines
    June 5, 2025
    The Hidden Impact Of Stress On Your Body’s Alignment And Balance
    May 22, 2025
  • Policy and Law
    • Global Healthcare
    • Medical Ethics
    Policy and Law
    Get the latest updates about Insurance policies and Laws in the Healthcare industry for different geographical locations.
    Show More
    Top News
    ACO infographic
    A Closer Look at Accountable Care Organizations [INFOGRAPHIC]
    June 5, 2014
    Medical Residents Get Their Own Social Network
    December 19, 2012
    FDA Social Media Guidance: Hangout on Air
    July 29, 2014
    Latest News
    Top HIPAA-Compliant Messaging Apps for Healthcare Teams
    June 25, 2025
    When Healthcare Ends, the Legal Process Begins: What Families Should Know About Probate and Medical Estates
    June 20, 2025
    Preventing Contamination In Healthcare Facilities Starts With Hygiene
    June 15, 2025
    Strengthening Healthcare Systems Through Clinical and Administrative Career Development
    June 13, 2025
  • Medical Innovations
  • News
  • Wellness
  • Tech
Search
© 2023 HealthWorks Collective. All Rights Reserved.
Reading: Should Medicare negotiate drug prices? Probably not
Share
Notification Show More
Font ResizerAa
Health Works CollectiveHealth Works Collective
Font ResizerAa
Search
Follow US
  • About
  • Contact
  • Privacy
© 2023 HealthWorks Collective. All Rights Reserved.
Health Works Collective > Business > Finance > Should Medicare negotiate drug prices? Probably not
BusinessFinancePolicy & Law

Should Medicare negotiate drug prices? Probably not

DavidEWilliams
Last updated: February 11, 2016 3:40 pm
DavidEWilliams
Share
3 Min Read
SHARE
ID-10074078

A popular idea, but not a good one.

ID-10074078

A popular idea, but not a good one.

It’s nice that the vast majority of Democrats (93%) and Republicans (74%) have found something to agree upon. Too bad it’s the overrated idea of having Medicare negotiate drug prices.

Prescription drug costs are rising again after years of flat or modest growth. New, expensive products are hitting the market while drug makers have also found ways to boost the prices of older products, even generics. There’s been a lot of ink (and electrons) spilled by people complaining about “the $1000 pill” and other outrages, like bad boy drug exec and price gouger Martin Shkreli. On the other hand, many Hepatitis C patients have been cured and the need for liver transplants and cancer treatment averted. That should be worth something.

Why do people think Medicare would be such a good negotiator? Private sector Part D drug plans already do a good job of price negotiation. Executives’ bonuses and stock options depend on getting good deals from the drug makers. Meanwhile, if Medicare tried to negotiate it would have to be willing to say “no” to certain drugs and to impose restrictions such as prior authorization and high co-pays. No doubt many in the vast majorities cited above would be quick to complain about those tactics, making it hard for Medicare to be the bad guy.

It’s a whole different ballgame if we’re talking about Medicare simply dictating the price it will pay or requiring rebates as Medicaid does. But that’s not negotiation.

In fact Medicare should do something about drug spending. Something more innovative than squeezing unit price. Medicare should develop and test full-fledged value-based medication reimbursement programs that reward manufacturers financially if their drugs work well and lower overall medical costs (not just drug costs). Only Medicare is big enough to get the attention of all the drug makers.

Medicare has done a good job testing out new payment models with providers (think Accountable Care Organizations and bundled payments), which set precedents that private payers can follow and improve upon. It should take the same approach with drugs –setting up innovative programs that can be tested and then implemented widely.

I want drug companies to have the potential to make a lot of money when they cure patients, improve quality of life, or lower medical costs. That’s good for patients, families, investors, private payers and the public purse. Outcomes based payment approaches led by Medicare could get us there. Medicare price negotiation or price regulation just won’t do the trick.

Image courtesy of Master isolated images at FreeDigitalPhotos.net

—

By healthcare business consultant David E. Williams, president of Health Business Group.

TAGGED:Medicare
Share This Article
Facebook Copy Link Print
Share

Stay Connected

1.5kFollowersLike
4.5kFollowersFollow
2.8kFollowersPin
136kSubscribersSubscribe

Latest News

women dental care
What Is a Smile Makeover and How Much Does It Cost?
Dental health
June 30, 2025
HIPAA-Compliant Messaging Apps
Top HIPAA-Compliant Messaging Apps for Healthcare Teams
Global Healthcare Policy & Law Technology
June 25, 2025
recovering from injury
Rebuilding After Injury: Path to Physical and Emotional Recovery
News
June 22, 2025
scientist using microscope
When Healthcare Ends, the Legal Process Begins: What Families Should Know About Probate and Medical Estates
Global Healthcare
June 18, 2025

You Might also Like

Transformational and Disruptive Changes Are Coming to the Delivery System

July 22, 2012

3 Universal Factors Hospital Administrations Need to Keep Nurses Satisfied

July 12, 2016
Comparing Adoption of EHR Systems by State Against the National Average
eHealthMedical RecordsPolicy & Law

Risk of EHRs: Malpractice Claims

March 22, 2014

Action Item: We Need Open Access to Scholarly Research Now – A Petition to Sign

May 25, 2012
Subscribe
Subscribe to our newsletter to get our newest articles instantly!
Follow US
© 2008-2025 HealthWorks Collective. All Rights Reserved.
  • About
  • Contact
  • Privacy
Welcome Back!

Sign in to your account

Username or Email Address
Password

Lost your password?