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Medicare could save up to $16bn if allowed to negotiate drug prices, paper finds

BMJ 2015; 351 doi: https://doi.org/10.1136/bmj.h4112 (Published 29 July 2015) Cite this as: BMJ 2015;351:h4112
  1. Michael McCarthy
  1. 1Seattle

Medicare could save up to $16bn (£10.3bn; €14.6bn) a year if it were allowed to negotiate drug prices directly with drug makers, just as Medicaid and the Veterans Benefits Administration currently can, a new policy briefing paper has concluded.

Medicare, the federal insurance plan for people 65 years of age or older and for permanently disabled people, subsidizes the cost of drugs and premiums for prescription drug insurance plans, which are administered through private insurance plans.

Although the private insurance plans administering the drug plans can negotiate drug prices, Medicare by law cannot. This limitation was included to win support from the drug industry. In 2013 Medicare spent $69.3bn on the program called Medicare Part D, which provides prescription drug coverage for 39.1 million people.

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