Ed Haislmaier on Efforts to Lower Drug Costs

In order to make Medicare drug price negotiation a reality, the government has to have additional leverage to negotiate that it doesn't have, explained Ed F. Haislmaier, the Preston A. Wells Jr senior research fellow at the Institute for Family Community, and Opportunity at The Heritage Foundation.

Transcript

With President Donald Trump focusing more on drug costs and patients feeling a greater burden from them, do you think drug price negotiation with Medicare can become a reality?

The problem with drug price negotiation proposals, is that if you want to get a lower price than you’re getting today, you have to have an "or else" from the pharmaceutical companies. And the "or elses", the alternatives, are 1) give us a lower price or we won’t let the patients get your drug, or 2) give us the lower price or we will take away your property rights, your patents. Neither of those "or elses" are particularly attractive.

So, what that means as a practical matter is members of Congress can put bills in for drug price negotiation, but unless they’re willing to take the politically unpopular stand of not letting seniors have drugs if the company doesn’t play ball, or taking away property rights, then the Congressional Budget Office is gonna score them a zero. The private sector already has leverage to negotiate. The government doesn’t have any additional leverage the private sector doesn’t have except the ability to deny the drug to the patient or the ability to take away their property rights.