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Drugs’ high cost traced to Medicare limits

There has been a lot in the news about how expensive the American health care system is. The reasons behind this are complex, and we all share some blame: patients, doctors, hospitals – everyone.

One contributing factor happens to be the extremely high prices we pay for drugs compared with the rest of the world. It turns out our government did something back in 2003 that guaranteed higher prices for us, but almost no one knows about it.

At that time, seniors were struggling to afford their medications, so Medicare Part D was created to help cover their drug costs. Drug companies were very concerned that Medicare would use its leverage to obtain lower prices for medications. So they successfully lobbied to forbid Medicare from bargaining over drug prices.

Think about that for a minute. Our government basically gave an entire industry unrestricted access to taxpayer dollars. Whatever price the drug company wants to charge, that is the price that we must pay.

Medicare is the only insurance provider on the planet that is forbidden to negotiate over drug prices, and this has contributed to the escalating costs for all new medications.

Now, the drug companies will argue that they need all that money in order to bring us newer and better medications. And there are no bad guys in this story; some of those new medications do represent real breakthroughs.

But you should decide for yourself if we are really getting our money’s worth – try doing a Web search on “evergreening,” or “drug company expenditures.” Because even if you think we are getting a deal – and many people don’t – the one thing that is clear is that no one bothered to ask whether you thought this was a great idea.

Bills have recently been introduced to modify this, but they don’t address the basic problem. An example is the Medicare Drug Savings Act of 2013, which makes drug manufacturers provide rebates for low-income individuals (a kind of backwards way of bargaining, at least for people with limited resources). However, the bill is stalled.

And that is the real problem. The bill does not even begin to address Medicare’s inability to bargain over prices; it just nibbles around the edges.

Yet it is immediately subjected to partisan bickering that completely ignores the fundamental problem: Does any industry deserve unrestricted access to our money? Politicians are always ready to complain about the cost of Medicare, but they don’t seem to want to do anything to really fix it.

The most obvious solution would be to allow some sort of price negotiation. If lobbyists make that impossible, we should at least be allowed to analyze how well a new drug works compared with cheaper alternatives, and adjust the price accordingly. For instance, in my specialty, we have a $25 drug that is usually as effective as a $2,000 drug, yet doctors are actually reimbursed more if they use the expensive one! And there is nothing anyone can do about it.

As you watch your co-pays, deductibles and premiums climb higher and higher, remember how distorted our health care system has become, thanks to lobbyists and special interests. Remember how Congress fusses over bills that fail to address the fundamental problem.

Thirty years ago, everyone went berserk when a defense contractor charged several hundred dollars for a $7 hammer, but now no one seems to care that an entire industry gets all the money it wants, no questions asked.

Dr. Jonathan D. Walker is an assistant clinical professor at Indiana University School of Medicine in Fort Wayne. He wrote this for The Journal Gazette.