Yesterday's Seattle Times ran a version of this story from the New York Times on the policy difficulties facing the Democrats' proposal to have the federal government negotiate directly with pharmaceutical companies set drug prices. The trade off is pretty clear under such a scheme: either the federal government achieves the supposed cost-savings by limiting the choice of drugs available to seniors or the plan doesn't have a prayer of achieving the costs savings Democarts are supposedly seek to achieve.

The conundrum of the issue is evident just in the original New York Times article alone. AARP is quoted as saying "'Medicare has 43 million members. And zero bargaining power when it comes to prescription drug prices.'" Yet the whole article is talking about how the Democratic proposal compares with the negotiations that already take place in the competitive, private sector environment in which the drug benefit is delivered to seniors, including this revealing passage:

Dr. Alan M. Garber, director of the Center for Health Policy at Stanford University, said he did not see how Medicare officials could obtain big discounts unless they were able to establish a restrictive formulary.

"To obtain drugs at low prices, a purchaser must be able to say no to covering a particular drug," said Dr. Garber, who is an economist and a physician. "If you cannot walk away from a deal, there's no way you can be sure of obtaining a low price. That's true whether you are buying a car, a house or medications."

The end result of such government "negotiations" is pretty clear. It only achieves its financial goals by restricting patient access to prescription drugs. That's not only a political loser given the clout of seniors, its an economic loser since treating chronic conditions through proper prescription drug care is invariably less expensive then treating the condition regularly in the hospital or the doctor's office.

Despite the policy weakness of the Democrats' proposal, it has some political hope in a newly-empowered Democratic Congress, where even some Republicans may be hesitant to cast a vote that could be billed (incorrectly) as favoring big, bad pharmaceutical companies over poor little grandma who needs her medicine. For all that, the case against the proposal is clear (see past coverage questioning the idea here, and a summary of media skepticism of the measure here).

If the proposal passes the House, it faces a lot of skepticism in the Senate. There are obvious questions, including in the New York Times article, regarding whether or not the measure can achieve hoped for savings without undesirable limits to prescription drug access. Absent the ability to achieve such financial benefit for the government, votes in the Senate to tinker with an already successful program will be tougher to find, especially since Finance Committee Chairman Max Baucus is already skeptical of the direct negotiation proposal, even while he has other complaints with the program's implementation.

In the meantime, Republicans who are known to deviate from the party line at times, such as Congressman Reichert, would be well served to defend the current successful program which is benefiting seniors, than to support switching to a system that appears destined to do more harm than good, no matter how cute a press release it makes for.