How the IPI Model Would Introduce New Market Competition to Medicare Drug Spending

By: John O’Brien , Senior Advisor to the Secretary for Drug Pricing Reform

Summary:

The administration’s new initiative on competition and negotiation will result in lower drug prices for seniors.

The Centers for Medicare & Medicaid Services (CMS) recently asked the public: “How can we get drug companies to give American doctors and patients better deals on Medicare Part B drugs?” Somehow, that has led to accusations of importing price controls, threatening patient access, and jeopardizing new cures. It’s time to set the record straight.

Medicare isn’t proposing to set prices in Medicare Part B; it already sets prices in Medicare Part B. CMS isn’t proposing to import foreign price controls; the current Average Sales Price methodology for Part B drugs defended by opponents of this policy, some of whom benefit from the higher prices set by Medicare, enables and subsidizes socialist governments and their artificially low price fixing regimes. As a result, Americans pay 80 percent more, on average, for the most costly physician-administered drugs than patients in other developed countries. Free market advocates and those who have philosophical concerns about government price fixing should be among the most vocal opponents of the status quo.