Flaw in the Democratic Drug Plan

January 8, 2007

The New York Times ran a piece today covering a design flaw in the Democrats’ drug plan. The plan instructs the Secretary of HHS to negotiate lower drug prices. But it also says that, while individual plans may have their own formularies, that the Federal government can not “establish or require a particular formulary.”

That makes it all but impossible for the Secretary to negotiate lower prices. The individual plans could negotiate, based on their own formularies, but the government as a whole would not be able to barter very effectively. Without the leverage that comes with being able to refuse a price it doesn’t like, the governmenthas no real ability to bargain.

What the Times doesn’t explicitly say is that this is a conflict between two policy objectives: Using the buying power of the government to lower drug costs, and retaining the ability of seniors and their doctors to choose whatever drugs they prefer. (If they don’t like their health plan’s formulary they can enroll in another one next time.)

This is a debate the Democrats won’t be able to avoid. Here’s their choice: they can address it head on by making a difficult choice, or they can pass a bill without teeth. I don’t see a third way.

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One Response to “Flaw in the Democratic Drug Plan”


  1. This is quite a hot info. I’ll share it on Delicious.


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