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.
Ok, but don’t Medicare vendors already have that freedom? This article implies that it is not executives from private vendors negotiating prices, but a bureaucrat from a federal cabinet.
As Grassley says, “At present, he said, the private companies managing the drug benefit for Medicare compete among themselves and negotiate over prices with drug manufacturers. We have lower drug prices for beneficiaries, lower program costs for the government, and prescription drug choices ... Competition is working,”
Further along the articles says, “Some Senate Democrats endorsed a more forceful approach like the House-passed bill. But they praised Baucus for seeking a political middle ground by leaving price negotiation up to the discretion of the Secretary of Health and Human Services, whose department is in charge of the Medicare program.”
So, what am I missing here? It doesn’t seem like private vendors are going to be doing the negotiating at all, but instead it seems as if the government is going to demand drugs at a certain price.
I hope I’m not annoying you with this discussion, but I’m just not getting what the controversy is if (as you say) private vendors are doing the negotiating. I mean, heck, you’re right they *have* been doing that all along, but that is not what the article seems to imply.