How Medicare Could Get Better Prices On Prescription Drugs

10 Pages Posted: 22 Nov 2009 Last revised: 16 Apr 2013

See all articles by Kevin Outterson

Kevin Outterson

Boston University School of Law

Aaron S. Kesselheim

Brigham and Women's Hospital/Harvard Medical School; Harvard University - Edmond J. Safra Center for Ethics

Date Written: September 1, 2009

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.

Keywords: Drug costs, Medicare Part D, therapeutic substitution, drug importation

Suggested Citation

Outterson, Kevin and Kesselheim, Aaron S., How Medicare Could Get Better Prices On Prescription Drugs (September 1, 2009). Health Affairs, Vol. 28, No. 5, 2009. Available at SSRN: https://ssrn.com/abstract=1510847

Kevin Outterson (Contact Author)

Boston University School of Law ( email )

765 Commonwealth Avenue
Boston, MA 02215
United States

Aaron S. Kesselheim

Brigham and Women's Hospital/Harvard Medical School ( email )

1620 Tremont St
Suite 3030
Boston, MA 02120
United States
617-278-0930 (Phone)
617-232-8602 (Fax)

HOME PAGE: http://www.drugepi.org/portal

Harvard University - Edmond J. Safra Center for Ethics ( email )

124 Mount Auburn Street
Suite 520N
Cambridge, MA 02138
United States

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