Allowing Medicare to Negotiate with Drug Makers can Dramatically Lower Costs

The U.S. House of Representatives approved H.R. 3 this week- an important and common-sense consumer protection bill that would lower the cost of prescription drugs by allowing the HHS Secretary to to directly negotiate drug prices for up to 250 of the highest-priced drugs (including insulin).

As it stands right now (and as it’s been for decades) pharmaceutical companies set the prices that Medicare has to pay and prohibits Medicare from negotiating with drug makers. The fact that Medicare can’t negotiate prices raises costs to both Medicare patients and everybody that contributes to the Medicare fund through their payroll taxes.

The bill now moves on to the Senate where it has an uncertain future. If it were ultimately successful, it could have a dramatic effect – lowering the costs to consumers by lowering costs for coverage in both Medicare and private health insurance.

Under the process laid out in the bill, the secretary of health and human services could negotiate the price of as many as 250 drugs each year. The negotiation process would prioritize drugs with the greatest savings potential—those that rank highest by spending, have no generic or bio-similar competitor, and have a large pricing gap between the United States and peer nations.