A new analysis casts doubt on Medicare’s ability to reduce drug prices if it were allowed to negotiate, a common reform proposed by politicians to fight high drug prices.
Without more tools to reduce prices, Medicare negotiations “would not save a meaningful amount,” according to a fact sheet released Monday by the nonpartisan think tank Committee for a Responsible Budget.
The think tank found that Medicare Part D, the program’s prescription drug plan, paid $62 billion on drugs last year. That amount is expected to balloon to $111 billion per year over the next decade due to spikes in drug prices and increased Medicare enrollment, according to the committee.
Overall, the U.S. spent an estimated $328 billion last year on pharmaceuticals among all payers including private insurance, the think tank said.
To have a meaningful impact on prices, the Obama administration would need more than just the power to negotiate for lower prices for Medicare. It also would need to be able to remove certain drugs from coverage or to institute price caps, the think tank said, citing a 2007 estimate from the Congressional Budget Office.
However, price caps would allow Medicare Part D to save $11 billion a year, according to the budget office.
Congress hasn’t done much to address high drug prices, despite several polls showing that the issue is a growing concern for Americans.
Democratic presidential candidates Hillary Clinton and Sen. Bernie Sanders have endorsed Medicare negotiations, as has GOP front-runner Donald Trump.
Congress has required generic drug makers to provide a Medicaid rebate for their products only if they are more expensive than a certain target.
President Obama proposed including Medicare negotiations in his budget, but the proposal has gone nowhere in Congress.
The prohibition against drug negotiations was placed in the 2003 law that created Medicare Part D.
