Friday, April 20, 2007

Oddfellows Go Where Senators Fear To Tread

My posting on the creation of the National Health Service - see "Rechabites and Reprobates" - is brought into sharp focus by an article in yesterday's New York Times. In the United States, Medicare is is the health insurance programme administered by the government, covering some 43 million people who are either age 65 or over or who meet a number of other, very limited, criteria. Extremely limited though its coverage is, it is the major funding agency in the healthcare market and the nearest thing the States has to a national health insurance service. Since the beginning of last year, Part D of Medicare covers - again is certain limited circumstances - the provision of some prescription drugs. Again, limited though this coverage is, it means that Medicare is the main funder of pharmaceutical spending in the biggest pharmaceutical market in the world. As any budding economist or Tesco executive will tell you, being a big buyer has its advantages. Because of the nature of cost and prices structures, this is even more the case in the pharmaceutical industry. During my time on the Board of an NHS trust I can recall numerous occasions when we effectively found ourselves with considerably more money to spend on frontline services because the NHS had negotiated a lower price for one or more of the drugs being prescribed for patients.
The strange thing about the existing law in the USA is that Medicare is specifically forbidden from negotiating lower drug prices, setting drug prices, or establishing a uniform list of drugs covered by the scheme. To allow it to do so, it seems, would be to allow it to take advantage of its dominant market position! One of the main proposals brought forward by the Democrats when they took control of the Senate was a Bill that would allow Medicare to negotiate lower drug prices with the big pharmaceutical firms. As the article in the New York Times relates, that proposals has now fallen because it failed to attract the 60 votes it would need to go forward. The arguments used against the Bill by leading Republicans include the assertion that private competition works best and that agreement with the proposal would be "a step down the road to a single-payer government-run health care system" (and remember, this is an argument against the proposal). Thus, it appears, where the Rechabites, the Buffaloes, and the Oddfellows went yesterday, the US Senate is unable to go today. Even if a Senate majority had been possible for this very limited, very muted reform, it would have made little difference. President Bush had already declared that he would veto any such proposal.

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