Hillary Clinton and Donald Trump agree that Medicare bureaucrats should be unleashed to negotiate lower prices with drug companies, and predict billions of dollars in savings as a result. In this political era when any common ground between these two adversaries should be venerated, it is a shame that we must point out that they are both wrong.
Unlike the traditional Medicare system, which sets reimbursement rates for thousands of procedures and services, the Medicare drug benefit program (Part D) uses private companies to manage the needs of its 39 million enrollees. The largest health plans in the country are participating in Part D and contract with one of four dominant pharmacy benefit managers to negotiate prices with drug companies.
These benefit managers do the same job for employers. For example, CVS Caremark administers drug benefits for nearly 65 million Americans, including millions of Medicare beneficiaries. Express Scripts, the largest such company, negotiates drugs prices for more than 85 million members.
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