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The Only Negotiation that Matters?

 
• By Michael McCaughan

Economists looking at drug prices under Medicare agree on one thing: without control over formularies HHS won't have the power to drive discounts. One told Congress that instead of giving HHS more power, you should give plans full discretion to set formularies, even in the so-called protected classes. But don't count on that happening any time soon.

To economists looking at drug prices under Medicare Part D, the focus on giving the federal government price negotiation authority is misguided. To exert power over prices, a negotiator has to be able to move market share. And ultimately, that means they have to have the power to exclude coverage.

Since the House proposal to authorize price negotiation under Medicare Part D (HR 4) explicitly prohibits creation of a national formulary, the notion that the Secretary of Health & Human...

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