But why wouldn’t vendors already be trying to minimize the cost of purchasing drugs from manufacturers? Any competently managed vendor would try to purchase all drugs at the absolute lowest price. This simple step is what allows them to maximize profit.
You’ll have to forgive me, but I’m skeptical about “government negotiation” in this area. This is ussually code for government edicts. What happens if manufacturers say “no”? Will the manufacturer for a particular drug be replaced with one who makes it cheaper? If so, then why hasn’t the vendor already replaced them? Is the vendor charging too much? If so, then replace/drop that vendor. I was in the business world for awhile (I worked for a wholesale distributer). There is just something about this whole bill that screams “unnecessary government control”.
They are. All major health plans negotiate with manufacturers for the lowest price they can on prescriptions. If they can't get a price that is compatible with what they want for their subscribers, they eliminate that drug from the formulary or come up with a generic alternative. The bigger they are in terms of volume, the more negotiating power they have with the drug companies. Medicare contracts with providers to take care of Medicare patients. They try to apply the same principles to negotiating as any other health plan. The vendors for Medicare have the advantage of having huge numbers of subscribers and they can, therefore, negotiating better prices if they are allowed to do so.
What happens if manufacturers say “no”?
They do this already both in negotiations with private carriers and with vendors who have the Medicare contracts.
If the issue that you have is with "too much government control", understand that the Medicare contracted private vendor needs to have the same ability to negotiate with the drug companies or supply companies or whatever as any private vendor. The benefit is a reduction in prices for Medicare and, therefore, for the taxpayer.