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WebMemo #03-07 on Health Care

January 12, 2007

Medicare Malady #03-07: You Call This

By

Whether you are hammering out a union contract, settling the Israeli-Palestinian conflict or getting your five year old to eat vegetables, everybody in the world negotiates.

The new House leadership now wants the feds to negotiate drug prices for American seniors. Unfortunately, it won't work. Why? As Heritage Foundation health care experts Greg D'Angelo and Robert Moffit explain in a new paper, there are rules to successful negotiations, and the government can't follow those time-honored rules when "negotiating" Medicare drug prices.

Government "negotiation" would surely denigrate into "an exercise of government power to fix prices and exclude from the market any company offering a drug at a higher price," D'Angelo and Moffit write.

In other words, the government price "negotiation" will necessarily limit patient choice, increase regulations and raise drug prices. That's no way to help seniors seeking effective, affordable drugs. Instead, it would kill the real negotiations that already occur among private pharmacy benefit managers for Medicare drugs prices. This is why the 2003 Medicare prescription drug benefit is costing far less than originally projected.

To read more about the dangers of letting government "negotiate" Medicare drug prices, click here.

For more information or to receive an e-mail version of "Medicare Maladies," contact medicaremaladies@heritage.org or 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 heritage.org.)

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