Vice President Biden: "If we just did one thing, if we just -- if they allow Medicare to bargain for the cost of drugs like Medicaid can, that would save $156 billion right off the bat."
In his debate with Paul Ryan last Thursday, Vice President Biden basically proposed demolishing Medicare Part D, the enormously successful -- and bipartisan -- program for covering prescription drugs for seniors. Today, Medicare Part D strikes a careful balance between protecting seniors from high drug costs, while encouraging pharmaceutical companies to invest in the next generation of treatments for serious diseases like Parkinson's, depression, Alzheimer's and cancer. Biden's plan would destroy that balance, imperiling innovation, killing jobs and threatening seniors' access to innovative medicines.
The federal government doesn't "bargain" through Medicaid. Rather, it sets prices and expects drug-makers to follow. Extending those price controls to Medicare would diminish U.S. based innovation and kill jobs.
Part D may be the most successful part of Medicare today. It provides a safety net for seniors, protecting them from high drug costs, while also giving them an incentive to shop for the most cost-effective private-sector drug plans that cover the medicines they need.
The program has been an enormous success by every reasonable measure. Compared to initial projections in 2005, Medicare Part D spending is over 40 percent below government estimates.
The nonpartisan Congressional Budget Office, the Medicare Trustees, and the Centers for Medicare & Medicaid Services (the government department that runs Medicare) agree that competition between private plans -- a system called competitive bidding -- has helped keep Part D's costs low.
In fact, the average bid submitted by Part D plans this year (to take effect in 2013), was actually lower ($79.64) than the bid in the plan's first year, 2006 ($92.30). The actual cost to seniors is subsidized, with average monthly premiums around $30. The lowest-cost Part D plan for seniors, offered by United Health, costs just $15 a month.
Even former Obama administration Medicare chief Don Berwick, who "loves" Britain's single-payer health care system, has said that "a competitive market and good competition among Part D plans," played a leading role in keeping Part D costs below estimates.
The principle behind Medicare Part D is simple: Private prescription drug plans negotiate with drug companies to get the lowest prices possible on their medicines, both branded and generic. Plans cover a basic menu of drugs, as required by Medicare, but have the power to tweak their formularies beyond that, to offer seniors the best mix of coverage and pricing.
The Medicare Trustees find that "many brand name prescription drugs carry substantial rebates," ranging from 20 to 30 percent, and that such rebates have increased (on average) since the program's inception.