Medicare, the health care program that covers 57 million senior citizens and the disabled, is the nation’s single biggest purchaser of prescription drugs. The Kaiser Family Foundation estimates that Medicare costs this year for pharmaceuticals will be $113 billion, growing to $192 billion by 2024.
Unlike Medicaid, the federal program that covers the poor, and the Veterans Administration, both of which negotiate volume-based discount prices, Medicare must buy retail and sell wholesale. And it does so with your money.
A group of Democratic lawmakers, including New Hampshire Sen. Maggie Hassan, have sponsored a bill to change that and to improve the health care system in other ways. Making it legal to import prescription drugs from approved Canadian sellers is one of them.
The sponsors, in keeping with the KISS principle (keep it simple, stupid), should have stopped there. Both proposals enjoy broad public support and could, we believe, ultimately win bipartisan support despite what will be a massive lobbying effort by the pharmaceutical industry. In fact, President Donald Trump reacted positively to both plans on the campaign trail and in a meeting with Reps. Elijah Cummings of Maryland and Peter Welch of Vermont. The duo framed the issue in a way dear to Trump’s deal-making heart: “It would be like him needing 1,000 mirrors and paying the same per unit cost. He was animated about it,” Welch told a reporter from Yahoo Finance.
Keep the bill simple, and it has a chance. Older Americans are the biggest consumers of prescription drugs. They vote, and members on both sides of the aisle know it. The act, however, also would require drug companies to publicly report their research, development, manufacturing and marketing costs, and other information. Useful to know, but drug makers have a point when they argue that such information is proprietary.
The act would bar drug makers, but not other businesses, from deducting their advertising costs as a business expense. We realize that the United States and New Zealand are the only nations that allow their citizens to be bombarded with ads for medications to treat things like irritable bowels, constipation and erectile dysfunction (and we’d welcome their disappearance), but that provision will almost certainly fail on fairness grounds.
There’s more in the act, including an attempt to prevent the kind of vulturous price gouging that can occur when only one or a few players control the supply of a critical drug or device like the EpiPen. The ability of drug makers to extend patent protection by making a minor change to the product would be restricted. It would establish a $2 billion prize fund administered by the National Institutes of Health to reward the developers of new and better antibiotics and speed the closing of the so-called “doughnut hole” in Medicare drug coverage.
Those are all worthy goals, but every addition provides another excuse for lawmakers who might otherwise vote to allow drugs to be imported and Medicare to cut deals for better prices to say no. When eating an elephant, it’s wise to take small bites.
(Correction: An earlier version of this misstated the estimated amount of money Medicare will spend on pharmaceuticals this year and in 2024, according to the Kaiser Family Foundation. The numbers originally stated in the editorial reflected total spending on prescription drugs.)