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Drive a Stake Through the Heart of the Medicare-Drug-Price Monster

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Director at Public Health and American Well-Being Initiative
Joel M. Zinberg, M.D., J.D. is the Director of the Public Health and American Well-Being Initiative at Paragon Health Institute, and a senior fellow with the Competitive Enterprise Institute. A native New Yorker, he recently completed two years as General Counsel and Senior Economist at the Council of Economic Advisers in the Executive Office of the President.

Like a tenacious zombie in a science-fiction film, Medicare drug-price negotiation is back. One such proposal in President Joe Biden’s $1.9 trillion Build Back Better bill died in December, but Democratic senators eager to boost their chances in the midterms have resurrected it in a new bill.

Medicare Part D is a prescription-drug program that about 50 million Medicare beneficiaries (three-quarters of all enrollees) have voluntarily signed up for. Private-plan sponsors compete for enrollees based on benefits and price, such as premiums and cost-sharing. Sponsors negotiate drug-price discounts directly with manufacturers. The government is statutorily forbidden from interfering in the process.

The proposed legislation would allow Medicare to “negotiate” prices for a limited number of Part D prescription drugs, impose price controls limiting Medicare-drug-price increases to inflation and limit Medicare beneficiaries’ annual out-of-pocket drug costs to $2,000.

Of course, everyone knows that Medicare, which accounts for a huge percentage of drug purchases in this country, won’t so much negotiate prices as dictate them.

The full article can be found in The New York Post.

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