What’s more, there’s precedent for it. The government already obtains similar discounts for drugs sold under Medicaid. Before 2006, beneficiaries who were eligible for both Medicare and Medicaid got their drug benefits from Medicaid, where the rebate discounts were in effect. After 2006, the law called for Medicare, not Medicaid, to be in charge of the drugs for low-income seniors—meaning that the government would now have to pay higher prices for their medicines than Medicaid would pay.
Advocates of the new effort to allow the rebates—led by the grassroots activist group Alliance for a Just Society and HCAN, which was instrumental in passing Obamacare—hope this approach will be a foot in the door, and lead to eventual price negotiations with the drug companies. How the proposal fares in Congress depends on whether the president himself is really serious about it and on the success of the grassroots campaign the groups are waging to build support for the measure.
For their part, drug companies are working hard to make sure that even the weaker measure dies quickly. (See accompanying post, Big Pharma’s army of messengers.) As ammo, they are raising the same argument they have for years: The high prices of pharmaceuticals are justified because drug companies need the money for expensive R & D (a claim disputed in a recent analysis in the British Medical Journal,
which reported “more than four fifths of all funds for basic research to discover new drugs and vaccines come from public sources.”
A German journalist I met recently asked me about the claim that drug companies need all this extra money to create new drugs. He wanted to know if anyone has ever really investigated that? Perhaps an op ed in the Los Angles Times last week by Dr. Arthur Kellerman, a senior policy researcher at the Rand Corp. (and a fine source for journalists) will help spark some much-needed reporting. Kellerman wrote:
If budget hawks are serious about lowering entitlement spending, they’ll remove Medicare’s straightjacket. Permitting the purchase of lower-cost drugs or care would be far more humane to seniors than cutting their benefits.
It’s an idea worth discussing, but won’t be unless journalists raise it.
The Second Opinion, CJR’s healthcare desk, is part of our United States Project on the coverage of politics and policy. Follow @USProjectCJR for more posts from this author and the rest of the United States Project team. And follow @Trudy_Lieberman.
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