We hear all the time that medical costs are too high in the U.S., and that Medicare is going to go bankrupt in the future. The President-Elect recently told us in a press conference that drug companies are “getting away with murder.” So how high are drug prices, and are those prices contributing at all to the high medical costs in the U.S.?
A Public Citizen research report looked at the prices that older citizens pay for their medications under the Medicare Part D plan, the largest federal drug program, which now covers more than 39 million people. You might be surprised to know that when the plan was passed by Congress under the Bush Administration, Medicare was specifically not allowed to “interfere” with the negotiations between drug manufacturers and pharmacies. The program was prohibited from leveraging its purchasing power to create economies of scale. And that would have been plenty of scale; currently, Medicare recipients account for 28% of all medical drug purchases in the U.S. marketplace.