Health Affairs

Health Affairs, 28, no. 5 (2009): w832-w841 (Published online 30 July 2009) doi: 10.1377/hlthaff.28.5.w832 © 2009 by Project HOPE	New Online   Getting Health Reform Done   After the State of the Union   Incremental Reform   E-Health in Developing World   Most-Read Articles in 2009

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How Medicare Could Get Better Prices On Prescription Drugs

Kevin Outterson and Aaron S. Kesselheim

Congress may reform drug pricing policies under Medicare Part D as part of a larger health reform effort. Currently, the "noninterference" provision prevents the government from negotiating drug prices on behalf of Medicare Part D prescription drug plans. Commonly considered reform proposals borrow ideas from Medicaid, either through returning dual eligibles to Medicaid drug pricing or by imposing mandatory rebates across the Part D population. We examine a menu of other options, including value-based pricing; expansion of generic and therapeutically equivalent substitution; increased formulary diversity; importation; and limited antitrust waivers. These latter options may reduce federal spending without direct government price negotiations.

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