title: Was Part D a giveaway to the pharmaceutical industry?
abstract: The Medicare Modernization Act (MMA) prohibited the government from negotiating drug prices, a feature that the act's critics characterize as a giveaway to the drug industry. Instead of the government negotiating to keep prices down, the act relies on competition among drug companies to obtain business from private insurers; yet, competition cannot be effective when there are no close clinical substitutes. In the past few years, the rate of introduction of first-in-class drugs has been low; if this continues, the prohibition on negotiation may be only a minor problem. However, if the prior rate of introduction resumes, the government may find itself with unacceptable expenditure levels.
authors.affiliation: Department of Health Care Policy, Harvard Medical School, 180 Longwood Ave., Boston, MA 02115, USA. newhouse@hcp.med.harvard.edu
authors.forename: Joseph P
authors.initials: JP
authors.lastname: Newhouse
authors.forename: Erica
authors.initials: E
authors.lastname: Seiguer
authors.forename: Richard G
authors.initials: RG
authors.lastname: Frank
mesh_terms: D000368:Aged; D003365:Costs and Cost Analysis; D004345:Drug Industry / Q000191:economics / Q000331:legislation & jurisprudence / Q000458:organization & administration*; D005569:Formularies as Topic; D006801:Humans; D007356:Insurance, Pharmaceutical Services / Q000191:economics* / Q000331:legislation & jurisprudence; D006278:Medicare / Q000191:economics / Q000331:legislation & jurisprudence / Q000458:organization & administration*; D004364:Pharmaceutical Preparations / Q000145:classification / Q000191:economics*
chemical_list: D004364:Pharmaceutical Preparations