Consumer-based Alternatives to Federal Prescription Drug Price Negotiations Hold Promise

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Many prescription drug experts and industry analysts are wary of current legislative efforts that would allow Medicare to negotiate drug prices directly with pharmaceutical manufacturers. Unintended consequences may create even bigger problems, leading some to advocate consumer-based cost-cutting measures, such as free prescription drug discount cards, instead of additional government interventions.

A recent AARP poll shows a whopping 85% of all Americans supporting federal price negotiations with pharmaceutical companies as a way to lower prescription drug prices. The House of Representatives recently passed HR-4, paving the way for Medicare to look for bargains. The current climate may lead you to think that a solution to high-priced medication is on the horizon. Many experts, however, warn that may not be the case.

As Senate debate on measures similar to those approved by the House approaches, experts warn that government intervention in the marketplace is unlikely to solve the prescription drug problem and that individual consumer action offers at least one alternative means of keeping prescription costs in check.

"Generally speaking we are against the idea of more government intervention of the Pharmacy Industry," said Rex Bowden, Jr., Chief Risk Officer from YourRxCard.com. "The problem with more government legislation of the pharmaceutical industry with regard to high prescription drug costs is you may partially solve one problem but you create ten new more complex problems."

Bowden, whose company offers a prescription drug discount card, is not alone in that assessment. A 2005 Manhattan Institute report discovered that governmental price negotiation powers, which have been available to the U.S. Veterans Administration, have empirically resulted in a massive decrease in the number of medications available to veterans.

Other research suggests that this and other factors inherent in the negotiation scheme could result in a shortage of new medications for minority and other at-risk groups. A report from the National Minority Health Month Foundation argues that proposed Medicare price negotiation legislation represents a continuation of misguided policy producing "a one-size-fits-all system that, by its design, provides care of unequal quality to a diverse community."

Bowden recognizes that gaps exist in the current system but encourages individual consumer action as a means of fighting off high prescription costs. He argues that government intervention has historically led the marketplace to shift burdens to other consumers and that additional government intervention could backfire on three levels.

"First it's important to the consumer that the drug needed by the consumer be available. Second, the manufacturer needs to make a reasonable profit. Third, the potential to make profit drives competition, which reduces the profit. Manufactures need public investment dollars to make the expensive prescription drugs. Investors need the expectation of return on there investment," Bowden explained. He and many other industry experts believe that federal price negotiations could adversely affect all of those considerations.

Instead of looking for federal solutions, Bowden and others recommend that consumers consider ways they can help to trim drug prices.

YourRxCard.com, Bowden's company, offers a free discount card that can produce significant prescription savings at more than 56,000 pharmacies across the U.S. Recent company research suggests that users of the free discount card average 40% costs savings, with some reducing prescription expenses by as much as 75%.

"With respect to federal price negotiation," Bowden offered, the issues are very complex and what on the surface may sound like a good idea may or may not result in a good result for all." Non-governmental solutions like YourRxCard.com, however, are "very effective in providing some discount relief to all American consumers in the gaps of the current system while effectively balancing the needs of the Rx Drug Pharmaceuticals Industry and its investors."

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Colin Criminger

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