Pelosi: Drug industry profits from Medicare are ripping off taxpayers

Enacted by a GOP-controlled Congress in 2003, the Medicare prescription drug program – also known as Part D – expanded the popular seniors’ healthcare program to cover pharmaceuticals. Bowing to the drug lobby, the Republican sponsors explicitly barred the Medicare agency from leveraging its bulk-purchasing power to haggle with companies over prices for beneficiaries’ drugs. 

Other federal programs, including the Department of Veterans Affairs (VA), are able to negotiate directly for lower prices, leading to billions of dollars in savings to taxpayers.

For instance, Medicare Part D plans spend 99.7 percent more than the VA for the generic form of the hypertension drug Norvasc, according to a 2009 report from the National Committee to Preserve Social Security and Medicare (NCPSSM), an advocacy group. For Lasix, the most frequently prescribed Part D drug, Medicare pays 64 percent more than the VA, the group reported.

Allowing Medicare to negotiate drug prices would save taxpayers up to $24 billion each year, NCPSSM found.

In late 2009, the House Democrats passed Medicare negotiation language as part of their version of healthcare reform. The provision didn’t survive in the final bill.