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==== Negotiating the prices of prescription drugs ==== Currently, people with Medicare can get prescription drug coverage through a public Medicare Part C plan or through the standalone Part D prescription drug plans (PDPs) program. Each plan sponsor establishes its own coverage policies and could, if desired, independently negotiate the prices it pays to drug manufacturers. But because each plan has a much smaller coverage pool than the entire Medicare program, many argue that this system of paying for prescription drugs undermines the government's bargaining power and artificially raises the cost of drug coverage. Conversely, negotiating for the sponsors is almost always done by one of three or four companies typically tied to pharmacy retailers each of whom alone has much more buying power than the entire Medicare program. That pharmacy-centric versus government-centric approach appears to have worked given that Part D has cost 50% or more under original projected spending and has held average annual drug spending by seniors in absolute dollars fairly constant for over 10 years. Many look to the [[Veterans Health Administration]] (VHA) as a model of lower cost prescription drug coverage. Since the VHA provides healthcare directly, it maintains its own formulary and negotiates prices with manufacturers. Studies show that the VHA pays substantially less for drugs than the PDP plans Medicare Part D subsidizes.<ref>Families USA, No Bargain: Medicare Drug Plans Deliver High Prices (Washington, DC: January 2007).</ref><ref name="law.umaryland.edu">{{cite web|url=http://www.law.umaryland.edu/marshall/crsreports/crsdocuments/RS2205902182005.pdf|title=The Pros and Cons of Allowing the Federal Government to Negotiate Prescription Drug Prices|work=law.umaryland.edu|access-date=March 6, 2012|archive-date=June 5, 2008|archive-url=https://swap.stanford.edu/20080605213812/http://www.law.umaryland.edu/marshall/crsreports/crsdocuments/RS2205902182005.pdf|url-status=dead}}</ref> One analysis found that adopting a formulary similar to the VHA's would save Medicare $14 billion a year.<ref>Austin B. Frakt, Steven D. Pizer, and Roger Feldman. "Should Medicare Adopt the Veterans Health Administration Formulary?" Health Economics (April 19, 2011).</ref> There are other proposals for savings on prescription drugs that do not require such fundamental changes to Medicare Part D's payment and coverage policies. Manufacturers who supply drugs to Medicaid are required to offer a 15 percent rebate on the average manufacturer's price. Low-income elderly individuals who qualify for both Medicare and Medicaid receive drug coverage through Medicare Part D, and no reimbursement is paid for the drugs the government purchases for them. Reinstating that rebate would yield savings of $112 billion, according to a recent CBO estimate.<ref>{{cite web|url=http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/120xx/doc12085/03-10-reducingthedeficit.pdf |title=Reducing the deficit |website=Cbo.gov |access-date=2019-06-14}}</ref> Some have questioned the ability of the federal government to achieve greater savings than the largest PDPs, since some of the larger plans have coverage pools comparable to Medicare's, though the evidence from the VHA is promising. Some also worry that controlling the prices of prescription drugs would reduce incentives for manufacturers to invest in research and development, though the same could be said of anything that would reduce costs.<ref name="law.umaryland.edu"/> However, the comparisons with the VHA point out that the VHA covers about half the drugs as Part D.
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