The theory behind the House Leadership's bid
to make the feds negotiate drug prices for Medicare patients is
simple: Use the leverage of the Great Society program's 42
million enrollees to drive down drug coverage costs.
Not a bad idea, at first glance. Forty-two
million is a lot of people - about the population of Spain. But
that's nothing compared to the size of private-sector drug
providers that Medicare will have to deal with, according to
Heritage Foundation health care experts Greg D'Angelo and Robert
Here's what D'Angelo and Moffit found: In this
corner stands Medicare. It has 42 million patients but actually
covers only about half - 22.5 million - through its prescription
drug benefit. In the other corner are private pharmacy benefit
managers. They cover 217 million individuals - or three out
of every four Americans. The largest manager, Caremark, covers 80
To paraphrase Ronald Reagan, Medicare couldn't
be effective at securing lower prices because it's not negotiating
from a position of strength.
Even worse, D'Angelo notes, "negotiations"
mean Medicare would have to refuse coverage of drugs made by
companies that refuse to produce it for the price "offered."
Thus, Medicare patients might be denied access to new or preferred
drugs, if Washington bureaucrats deem them "too expensive." The
only way around that problem? Price fixing-a prescription for
less medical research, fewer new drugs and higher drug prices for
everybody outside the system. You can read more of
D'Angelo and Moffit's research
information or to receive an e-mail version of "Medicare Maladies,"
call Heritage Media Services at (202) 675-1761. ("Medicare
Maladies" is a regular feature, first launched in 2003 and revived
in 2007, from The Heritage Foundation. Sad to say, there's another
malady coming your way soon. Other "maladies" are also available on