Drug Prices for Indigent Medicare Patients: The Same As Medicaid or Cost plus?

The New England Journal of Medicine (NEJM) (Oct. 12, 2011) looks at the proposal to require drug companies to offer low income Medicare beneficiaries the same prices given Medicaid recipients:

Seems like a reasonable money saving idea but:

Reducing Part D payments for low-income beneficiaries, it is argued, could undermine incentives for the pharmaceutical industry to invest in research and development, as well as create illusory savings by shifting drug costs to other parties. In considering the wisdom of such deficit-reduction proposals, it’s important to consider how well the market is working for Part D and whether there are important inefficiencies that can be eliminated, resulting in budget savings.

It is pointed out however that the market doesn’t seem to work well with the indigent elderly who most often of the medicare group have multiple chronic conditions (30% of the group) and spends more on drugs than others in the medicare group.

It concluded that:

The approach obtains savings without undermining incentives for developing important new medical treatments. The anticipated side effects would be outweighed by the size of the estimated budget gains. This is as close to a win–win solution as we can get.

Medicynical Note: Put pressure on drug companies to offer more affordable drugs, why that may be Un-American. Consider that drug companies spend more on marketing than research; pay nothing to the government for drugs developed from government funded research; all have increased their prices and revenue by incredible amounts during a recession/depression.

Big PHarma will oppose this initiative preferring that we continue to pay more for drugs than any other industrialized country in the world. That’s really Un-American.


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