Health Affairs

Health Affairs, doi: 10.1377/hlthaff.28.5.w832 (Published online July 30, 2009) © 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 ^1* Aaron Kesselheim ²

¹ Kevin Outterson is an associate professor in the Boston University School of Law in Massachusetts.
² Aaron Kesselheim is an instructor in medicine, Division of Pharmacoepidemiology and Pharmacoeconomics, Department of Medicine, at Brigham and Women's Hospital and Harvard Medical School in Boston.

^*Corresponding author.

Abstract

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. [Health Aff (Millwood) 2009;28(5): w832-41 (published online 30 July 2009;10.1377/hlthaff.28.5.w832)]

Key Words: Business Of Health, Consumer Issues, Health Reform, Managed Care - Medicare, Medicare, Pharmaceuticals, Health Spending

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