Why the New Congress Should Not Fix Drug Prices
by Greg D'Angelo

"In the first hundred hours of the 110th Congress, the new Congressional leadership is expected to introduce legislation to fix the prices of prescription drugs in the massive Medicare drug entitlement program. The Medicare drug benefit is a costly entitlement, and its design, particularly the congressionally ordained gaps in coverage, has no analogue in the private markets. But government price fixing is not a viable solution to any of these shortcomings.

While the design of the drug entitlement has its flaws, the basic structure, in which private plans compete free of government interference, is a constructive feature of the Medicare program. In devising this framework, Congress initially acknowledged that market competition and consumer choice are necessary to ensure that seniors have access to quality pharmaceuticals at affordable prices. Thus far, the performance of the drug program has ratified that initial assumption—in the first year alone, the projected average monthly drug premiums dropped by nearly 40 percent.[1] A government-controlled Medicare drug purchasing program, in contrast, would prove ineffective, inflexible, and unresponsive to the highly diverse personal needs of America’s seniors." Read on..