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
    How Not to Become a Victim of Medical Scams
    How Not to Become a Victim of Medical Scams
    December 22, 2021
    11 Ways You Can Care for Your Elder Family Members Health
    11 Ways You Can Care for Your Elder Family Members Health
    April 6, 2022
    How Can Brain Injury Lead To Dangerous Long-Term Effects?
    How Can Brain Injury Lead To Dangerous Long-Term Effects?
    August 30, 2022
    Latest News
    Choosing the Right Supplement Manufacturer for Your Brand
    May 1, 2025
    Engineering Temporary Hospitals for Extreme Weather
    April 24, 2025
    How a Level 3 RQF Helps in Health and Social Care
    April 9, 2025
    Breathing Easy: The Impact of Air Conditioning on Indoor Air Quality and Health
    April 6, 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
    medicaid drug costs
    Is Managed Care the Answer to Reduce Medicaid Drug Costs?
    August 14, 2013
    Mobile Health Around the Globe: Good work in Africa; Cell Phones Improve Health Education in Family Planning.
    August 20, 2012
    medical device standards
    FDA Updates List of Recognized Standards, Confusion Ensues
    September 5, 2013
    Latest News
    The Critical Role of Healthcare in Personal Injury Recovery: A Comprehensive Guide for Victims
    May 13, 2025
    The Backbone of Successful Trials: Clinical Data Management
    April 28, 2025
    Advancing Your Healthcare Career through Education and Specialization
    April 16, 2025
    Do Abuse Reporting Systems in Assisted Living Protect Residents’ Health?
    April 15, 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

Dr. Klaus Rentrop Shares Acute Myocardial Infarction heart treatment
Dr. Klaus Rentrop Shares Acute Myocardial Infarction
Cardiology
May 13, 2025
The Critical Role of Healthcare in Personal Injury Recovery: A Comprehensive Guide for Victims
The Critical Role of Healthcare in Personal Injury Recovery: A Comprehensive Guide for Victims
Health care
May 13, 2025
fitness
What Personal Trainers Can & Can’t Say When it Comes to Nutrition
Fitness Wellness
May 12, 2025
online nursing degree
Online FNP Programs Help Advance Your Nursing Career
Career Nursing
May 12, 2025

You Might also Like

Why I’m Not Having More Children

July 5, 2011

What Difference Has RomneyCare Made?

July 14, 2011

Patients to Have Right to Access Lab Test Result Data

February 7, 2014
image credit: Alec
BusinessHealth Reform

Medicine Has a Major Image Problem

February 13, 2013
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?