Lowering the price of prescription drugs is a complex issue. Still, there are several strategies that Medicare can consider to address this challenge, especially with a new Alzheimer’s drug that could cost taxpayers $5 billion. Here are some ways to lower Medicare costs.
Negotiating drug prices: Medicare can use its bargaining power to negotiate lower drug prices with pharmaceutical manufacturers. This could involve leveraging the large number of beneficiaries it covers to secure more favorable pricing agreements.
Allowing drug importation: Medicare could explore allowing the importation of prescription drugs from other countries where they are often available at lower prices. This would require ensuring safety standards are met while creating mechanisms to facilitate importation.
Increasing price transparency: Medicare can work to improve transparency in drug pricing by requiring pharmaceutical companies to disclose their costs of production, research, and development, as well as the prices charged in other countries. This information can help identify excessive pricing and support efforts to negotiate more reasonable rates.
Promoting generic and biosimilar competition: Medicare can encourage using generic drugs and biosimilars, less expensive alternatives to brand-name medications. This can be achieved through policies that incentivize the use of generics and streamline the approval process for biosimilars.
Reducing exclusivity periods: Medicare could support efforts to reduce the length of exclusivity periods for brand-name drugs. By shortening the time when a drug manufacturer has exclusive rights to produce and sell medication, generic alternatives could enter the market sooner, leading to increased competition and lower prices.
Empowering Medicare to negotiate formularies: Currently, Medicare Part D plans to negotiate drug formularies with pharmaceutical companies. Allowing Medicare to negotiate formularies on behalf of beneficiaries directly could lead to more cost-effective drug coverage and lower prices.
Addressing pharmaceutical rebate structures: Medicare can examine the complex system of drug rebates, which can contribute to higher list prices for medications. Revising rebate structures to ensure that the savings are passed on to patients at the point of sale could help lower drug costs.
Investing in research and development: Medicare could invest in research and development initiatives to promote the discovery and development of innovative drugs at lower costs. This could involve funding initiatives to improve drug manufacturing processes, explore alternative research models, or support public-private partnerships.
The goal should be to balance promoting affordability and maintaining incentives for innovation in the pharmaceutical industry.