Fix MedicareBy Cutting Drug Prices

July 21, 2004 -- Cutting US drug prices to the levels of other countries would allow seniors to get enhanced drug coverage and close a major gap in Medicare coverage, according to an analysis posted online today in Health Affairs by Gerard Anderson and his colleagues at Johns Hopkins and Penn State. The abstract of their article is as follows:


In 2003 citizens of Canada, the United Kingdom, and France paid an average of 34-59 percent of what Americans paid for a similar market basket of pharmaceuticals. If the Medicare program were to pay comparable prices for pharmaceuticals, it would be possible to eliminate the "doughnut hole" in its prescription drug benefit and keep Medicare drug spending within the overall limits established by Congress. This provides Congress with a clear choice -- reduce the level of cost sharing and improve beneficiaries' access to pharmaceuticals, or allow the pharmaceutical industry to use the higher prices to fund research and development and to engage in other activities.


At the moment, there is no choice. The Medicare bill that the US Congress passed and President Bush signed into law in December bars the government from directly negotiating prices with drug manufacturers.


MarketWatch: Doughnut holes and price controls. Gerard F. Anderson, Dennis G. Shea, Peter S. Hussey, Salomeh Keyhani, Laurie Zephyrin. Health Affairs, posted online July 21, 2004.

Barbara K. Hecht, Ph.D.
Frederick Hecht, M.D.
Medical Editors,

Related Links

  • Medicare (medterms entry)


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