One of the key pledges made by the Democrats in last fall�s election was that they would fix the Medicare drug benefit by having Medicare negotiate lower prices with the industry. They now seem prepared to take steps to do this by creating a structure in which Medicare would negotiate on behalf of the insurers in the plan. (The Democrats are still avoiding the simplest method of just having Medicare offer a drug plan as an add-on to the traditional program, as is done in the private sector.) Opponents of such a plan, which will lower drug industry profits, are trying to sow confusion, and the NYT seems prepared to help. Today�s charge is that if Medicare negotiated drug prices, then it would have the government picking drugs for people. This completely misrepresents the facts. Medicare would presumably be able to get most drugs at substantial discounts relative to the prices paid by private insurers. That has been the case with the Veterans Administration and every other wealthy country in which the government run health care system negotiates prices. There will be some companies that refuse to make their drugs available at lower prices to Medicare. But, this doesn�t mean that patients cannot get the drugs. It simply means that they will pay prices that are comparable to what they are currently paying for these higher cost drugs. The availability of a set of lower priced drugs on a Medicare formulary will be a new option available to patients; it will not take away any existing options. The claim that this would somehow restrict patients� drug choice would be like saying that the beer industry is restricting consumers� choice in beer if all domestic beers were offered at half-price. After all, this would mean that you would suddenly have to pay much more money if you wanted to buy an imported beer rather than a domestic beer. It is understandable that the drug industry and the politicians it supports would advance such arguments. There is no reason for the media to take them seriously.
--Dean Baker
