Making Lemonade Out of Lemons
By Albert B. Kelly
Recently in this very space, I did a little riff on the idea
that elections have consequences. I was referring to the fact that the
President-elect has nominated Tom Price, a House member from Georgia to be the
new Health and Human Services Secretary.
That nomination troubled me, because if he has his way, Price
may well push a plan to turn Medicare into a block grant that would be turned
over to the states to run.
That means that each state would get a chunk of money to
administer Medicare at the state level, though overall Medicare funding itself would
be cut a great deal in the process.
For the record, Medicare is the federal health insurance
program for people who are 65 or older and younger people with certain disabilities
and chronic medical conditions.
If Medicare is turned over to the states as a block grant,
one thing we should absolutely insist on is the ability of states join together
to negotiate drug prices with the pharmaceutical companies. Why is this
important you ask?
It’s important because right now, Medicare, which the
largest purchaser of drugs in the world, is prohibited by law from negotiating drug
prices with the pharmaceutical companies.
Congress in its infinite wisdom passed a law ensuring that
Medicare has to pay 106% of what the drug companies’ claim is the “average
wholesale price” of whatever drug they’re peddling. Behold the power of big
Pharma and campaign contributions.
According to the research done by journalist and author
Steven Brill for his book “Bitter Pill” which is about our messed up health
care system, this little nugget costs us about $40 billion a year.
Without this law preventing Medicare from negotiating with
drug companies, we would pay roughly the same prices as Canada and they pay
anywhere from 30% to 50% less than we do for the same exact meds.
Congress also killed legislation that would have allowed
Americans to buy drugs from Canada- the drug companies lobbied hard against this
so as to protect their profits.
I mention all of this to say that if the new administration
is going to cut funding for Medicare, turn it into a block grant and give it
over to the states to handle, they should let the states- whether individually
or collectively- negotiate with the drug companies to get the best prices.
Regardless of whether the feds or the states administer
Medicare, we shouldn’t have to pay 106% of the “average wholesale price”- a
number that we’re forced to take as a matter of faith from the very companies
getting rich off of our illnesses and surgeries and diseases.
When pressed as to why they need us to pay so much money,
Big Pharma tells us it’s to continue research and development of the very
wonder-drugs that treat our ailments. Fair enough, but what happened to
competition and why are we doing the heavy lifting for the rest of the world?
If Medicare is turned over to the states as a block grant,
New Jersey should be allowed to negotiate drug prices with manufacturers. And if
we don’t have enough bargaining power on our own, we should be able to team up
with Delaware, New York, or Pennsylvania to negotiate as a regional block.
With Medicare being the largest purchaser of drugs in the
world, that’s a powerful negotiating position that would help to drive down the
costs of meds in this country. It would also level the playing field.
But it can only happen if New Jersey can join up with other
states to flex our collective muscle in the market place. I’m not in favor of
cutting Medicare funding and block-granting over to the states to run.
But if it has to happen- this block granting thing, if this
is the lemon we get, then we should at least be allowed to see if we can get a
little lemonade out of the darned thing.
Just a little lemonade in the form of allowing states to join
as regional negotiating blocks to haggle prices with the drug companies or at
least allow Americans to buy their meds at cheaper prices from Canada or
wherever.
There was much talk this election cycle about “draining the
swamp”. Regardless of how things go anywhere else, if Congress continues to prevent
Medicare from negotiating with the drug companies, then it’s a safe bet that
the swamp is still alive and well.