300 Groups Urge Lawmakers to Cut Costs, Not Benefits

For Immediate Release: February 14, 2013
Contact: Alan Barber, (202) 293-5380 x115

Washington, D.C. – American taxpayers could save as much as $541 billion by 2022 if Congress and the President enable Medicare to negotiate drug prices like other wealthy countries, according to an issue brief released today by an economics research group. As Washington wrestles with tax and spending decisions designed to reduce the budget deficit, a grassroots campaign is being launched to educate the public and lawmakers about the substantial benefits that drug-price negotiations could deliver.

The massive savings were estimated by the Center for Economic and Policy Research (CEPR), which today issued “Reducing Waste With an Efficient Medicare Prescription Drug Benefit.” The data show that by having Medicare negotiate drug prices comparable to those in other advanced nations, the federal government could save from $230 billion to $541 billion over the next 10 years. Additionally, state governments could save from $31 billion to $72 billion, and consumers could save from $48 billion to $112 billion over the same period.

To launch the grassroots campaign, Seattle-based Alliance for a Just Society gathered support from nearly 300 organizations nationwide to urge Congress and the President to enable Medicare to negotiate prescription prices with drug makers and suppliers. Health Care for America Now (HCAN) is coordinating legislative and field activity in states across the country to achieve the goal.

“It’s ridiculous for Medicare to be paying drug companies two and three times as much money for drugs as other countries at a time when we are cutting essential programs,” said Dean Baker, co-director of CEPR and author of the analysis. “This fix alone would go far towards hitting anyone’s deficit target.”

Minnesota’s two Democratic U.S. senators, Amy Klobuchar and Al Franken, are among the leading advocates for a way to bring down excessive pharmaceutical costs. “We shouldn’t be saddling our seniors with inflated drug prices for vital medications,” said Klobuchar. "This is a matter of fairness for our seniors, who deserve affordable prices for their prescription drugs, and it is a matter of fairness for America's taxpayers, who deserve less waste in our system. That’s why I introduced legislation to allow more affordable drugs for seniors and bring real savings for Medicare.”

Franken has also filed a bill to address the problem. “When I travel around Minnesota, I always hear from seniors that they're still paying far too much for prescription drugs,” said Franken. “I’ve reintroduced a bill to help make prescription drugs more affordable for Medicare beneficiaries across the country and to save taxpayers billions of dollars. This is a commonsense measure that will cut spending without cutting any vital services that Medicare recipients rely on.”

“In the choice between saving money or saving lives, the reality is that we can do both,” says LeeAnn Hall, executive director of the Alliance. “The President in his State of the Union address said as a country we need to cut the cost of prescription drugs. Here is an answer. The only question is if there is political will to take this all the way.”

Health care advocates expect strong opposition to this cost-savings policy. “The GOP would rather cut life-saving benefits for seniors than bring some of the most profitable companies on earth to the negotiating table,” said HCAN Executive Director Ethan Rome. “Medicare is one of the industry’s biggest customers, and negotiating with pharmaceutical companies will save substantial dollars.”

The CEPR brief shows that the savings are undoubtedly achievable, as has been demonstrated for many years by numerous wealthy countries that pay significantly less for prescription drugs than the U.S. does. Some may object that lower prices would sap much of the revenue and incentive for financing research and development of new drugs, but the brief points out that they would also disincentivize improper marketing of medications and misrepresentation of quality and safety of drugs, which occurred in the case of Vioxx, the report said. There is a strong argument for developing a more efficient mechanism for financing drug research, and there is little reason for people in the United States to continue to overpay for a system that serves us poorly, according to CEPR.

The full report by CEPR is available here.

A comprehensive list of organizations that signed the letter can be found at http://allianceforajustsociety.org/save-costs-save-lives.

The Alliance for a Just Society is a national coalition of state-based grassroots community organizations that address economic, racial, and social inequities to advance economic justice and generate increased power and sustain social change.

Health Care for America Now, the nation’s leading grassroots health care coalition, led the fight to win health reform. HCAN works to promote the Affordable Care Act, protect Medicare and Medicaid, and keep Congress from being steamrolled by corporate special interests.

The Center for Economic and Policy Research is an independent, nonpartisan think tank that was established to promote democratic debate on the most important economic and social issues that affect people's lives. CEPR's Advisory Board includes Nobel Laureate economists Robert Solow and Joseph Stiglitz; Janet Gornick, Professor at the CUNY Graduate Center and Director of the Luxembourg Income Study; and Richard Freeman, Professor of Economics at Harvard University.