I recently wrote about how Big Pharma largely drafted the Medicare Part D legislation signed by George W. Bush in 2006, which resulted in billions of dollars in windfall profits for drug companies. How was this fleecing of seniors in need of medication accomplished?
The Pharmaceutical Research and Manufacturers of America (PhRMA) engaged in the customary DC practices of big campaign contributions, lobbying and actually writing passages of the Medicare Part D legislation. What goal did they achieve? They were able to get Congress to prohibit Medicare from negotiating a lower price for the cost of drugs. This meant that seniors were subject to excessive co-pays, because their chosen private insurance providers for Part D were not getting government-negotiated discounts. Insurance companies were also given permission to leave many drugs off their formularies (lists of covered drugs) and to price medications by tiers.
An October 2016 article in Mother Jones notes:
What’s more, Part D often pays far more for drugs than do Medicaid or the Veterans Health Administration—which, unlike Part D, mandate government measures to hold down prices. One report found that Part D pays 80 percent more for medicines than the VHA and 73 percent more than Medicaid. While researchers aren’t unanimous in their views, an array of experts have concluded that federal negotiating power—if backed up by other cost controls—would bring Part D drug costs more in line.