![]() In addition, PhRMA had claimed that, although federal law prohibits direct HHS negotiation with drug manufacturers, powerful purchasers such as insurance companies already negotiate with drug manufacturers to secure discounts and rebates, reducing drug prices to fair and competitive rates.īut experts have disputed the assertion that innovation justifies the high price of pharmaceuticals. ![]() The Pharmaceutical Research and Manufacturers of America (PhRMA)-a voluntary association of pharmaceutical and biotechnology companies-had argued that permitting the HHS Secretary to negotiate down drug prices would impede drug manufacturers’ ability to innovate new drugs. Just 10 brand name drugs accounted for nearly half of all Medicare drug reimbursements in 2013. Congress prohibited HHS, the federal agency that oversees the Medicare program, from engaging in any direct negotiations with drug manufacturers to ensure competition and innovation in the drug marketplace.īy prohibiting direct negotiations, however, Congress allowed a small number of highly priced brand name drugs to dominate Medicare reimbursement costs. Congress created a “Drug Price Negotiation Program,” in which the HHS Secretary and drug manufacturers will negotiate a “maximum fair price” for some brand-name drugs that have no generic competitors. Through the Inflation Reduction Act (IRA), the U.S. Department of Health and Human Services (HHS) to negotiate directly with drug manufacturers on behalf of Medicare recipients. This summer, legislators empowered the Secretary of the U.S. citizens often spend more for the typical brand name prescription than consumers living elsewhere.Īs the cost of drugs rapidly and disproportionately increases in the United States, how can regulators limit out-of-pocket expenses to consumers? The cost of brand-name drugs in the United States is up to four times higher than in other countries.
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