Change in US law could cut drugs spending by $30 billion
pharmafile | April 12, 2007 | News story | Sales and Marketing | US, reform
Calls to allow the US government to negotiate drug prices with the pharmaceutical industry have been reawakened by a new report which says it could save $30 billion a year.
The findings from the liberal-leaning Institute for the Americas Future think tank conclude that a change in the US federal law should be made to allow the government to negotiate.
Democrats led by Nancy Pelossi, the speaker of the House of Representatives and a long-term Medicare campaigner, passed legislation in January to remove the provision in The Medicare Modernization Act of 2003 which prohibits the government by law from interfering in negotiations. Senate leaders are now pushing for a vote on the issue.
The US parliamentary upper house the Senate would also have to pass the law for direct price negotiations to begin, something which the US industry and its supporters oppose.
Report co-author Roger Hickey says: "Drug prices are too expensive and the savings from negotiating prices are too great to ignore. Activists across the country are holding Congress feet to the fire. Congress needs to step up to the plate to lower prescription drug prices. The House has taken the first step. Its time for the Senate to follow suit."
US pharmaceutical industry body PhRMA has made its feelings clear on the issue, saying enforced price cuts could stifle innovation among drug companies. Senior vice president Ken Johnson said there was 'overwhelming evidence' that the Medicare programme is working for both old people and taxpayers. "Most troubling is that the policy changes the group seeks – allowing Medicare to negotiate drug prices – threatens to do more harm than good for patients in need of potentially life-saving medicines," he added.
PhRMA said surveys suggest that old people were saving $1,200 a year on their medicines under the existing scheme and believes that competition among Medicare drug plans were responsible for driving down costs. It argues that the non-interference clause of the Medicare Act protects against the government limiting patients' access to medicines they need, without compromising affordability and that government interference would have a negligible effect on federal spending anyway. "The government probably could not negotiate lower costs than the powerful private sector purchasers already negotiating for lower costs," Johnson said.
However, the Democrats wins at mid-term elections last year, which saw the party claim control of both Houses for the first time in a decade, put campaigners in a potentially powerful position.
Democratic senator Debbie Stabenow, who supports the change, says: "When so many Americans struggle to pay for the prescription drugs they need, it doesn't make sense to prohibit the federal government from negotiating the lowest possible drug prices on behalf of the 44 million seniors and people with disabilities who rely on Medicare."
One activist group, the Change America Now (CAN) Coalition is already planning to put pressure on individual senators to declare their stance on negotiating drug prices.
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