Indianapolis Star on federal drug policy

Maybe I am as dim as I seem. I certainly do not understand this editorial:

The notion of allowing the federal government to "negotiate'' prescription drug prices with manufacturers appears appealing, at least on the surface.

But U.S. senators, who are expected to take up legislation on that topic this week, should keep in mind that the Congressional Budget Office found that the measure would have a "negligible effect'' on spending. They also should note that federal researchers in February found that the new Medicare drug benefit is succeeding in lowering drug costs for senior citizens.

Why has that occurred? Because the system already is set up to enhance competition. Private companies that manage the drug benefit must compete among themselves to attract clients. Providers also negotiate with drug makers to hold down prices on medications.

"We have lower drug prices for beneficiaries, lower program costs for the government, and prescription drug choices,'' Iowa Sen. Chuck Grassley told Reuters last week. "Competition is working.''

That's a message that needs to be heard more often on Capitol Hill, where for some lawmakers political pandering is a full-time job.

Executives at Indianapolis-based Eli Lilly and Co., as well as other drug makers, worry that there is no such thing as negotiation when it comes to dealing with an entity as powerful as the federal government. When bureaucrats set the terms, haggling over costs can easily cross over into price-fixing.

Granted, it's not senators' primary job to worry about drug companies' bottom line. They should, however, be concerned over Medicare recipients' access to new medications. By attempting to control the market, Congress could end up prompting drug makers to withhold newer or more costly medications from the Medicare plan. That scenario already is playing out with Veterans Affairs benefits.

It's not a case of evil drug companies taking meds away from grandma and grandpa. It has everything to do with free markets and the need for public companies to keep their shareholders' best interests in mind.

The bottom-line question: Is this legislation really necessary? The evidence -- lower drug costs, healthy competition, lower than expected costs for the government -- indicates that it isn't.

I jsut do not buy that there is the competition between companies for Medicaid patients. I just do not buy that it is a good idea that the government is forbidden from negotiating prices for Medicaid. I do buy the idea that Lilly does not like the idea.