Liberal groups push for lower Medicare drug prices

By Elise Viebeck - 02/14/13 10:00 AM ET

A coalition of liberal groups is launching a campaign to allow federal officials to negotiate drug prices in Medicare, arguing the move will save billions of federal dollars every year.

The government is prohibited from bargaining for Medicare drug prices under current law. Congressional Democrats have tried with no success to reverse that policy.

"It's ridiculous for Medicare to be paying drug companies two and three times as much money for drugs as other countries at a time when we are cutting essential programs," said Dean Baker with the liberal Center for Economic and Policy Research in a statement Thursday.

Baker is the author of a new analysis comparing drug spending per person in the United States to spending in other countries. He found that for every dollar paid in the U.S. per person on medications, Canada, the United Kingdom and Denmark spend about 70, 40 and 35 cents, respectively.

Using those figures, Baker estimated that the federal government would save about $230 billion over the next 10 years if U.S. drug spending was more like Canada's. Savings would top $540 billion if the U.S. followed Denmark's lead, he predicted.

Three-hundred healthcare advocacy groups backed the analysis Thursday and vowed a grassroots campaign to "educate the public and lawmakers about the substantial benefits" of drug-price negotiations, according to the Alliance for a Just Society, which led the signature-gathering effort.

Health Care for America Now will spearhead the legislative campaign, the group said Thursday.

President Obama called for Medicare's ability to negotiate for cheaper drugs on the 2008 campaign trail. In the course of negotiations over the healthcare law, however, the White House dropped its support for the idea, drugmakers came on board, and Medicare drug price negotiations were not included in the final bill.

The pharmaceutical industry argues that insurance companies and pharmacy benefit managers already save consumers money by bargaining for prescription drugs. Opponents also argue that price negotiations by the federal government would lead to rationing for Medicare patients.

Sen. Amy Klobuchar (D-Minn.) recently introduced a bill (S. 117) to empower the Health and Human Services Department to negotiate for lower drug prices.

She lent support Thursday to the new grassroots campaign.

"This is a matter of fairness for our seniors, who deserve affordable prices for their prescription drugs, and it is a matter of fairness for America's taxpayers, who deserve less waste in our system," Klobuchar said.

—This post was updated at 10:30 a.m.