ACR202

Sponsored by:

Assemblyman JASON O'DONNELL

District 31 (Hudson)

Assemblyman JOHN F. MCKEON

District 27 (Essex and Morris)

SYNOPSIS

Urges Congress and President to require federal government to negotiate Medicare prescription drug prices.

CURRENT VERSION OF TEXT

As introduced.

A Concurrent Resolution urging the Congress and President of the United States to require the federal government to negotiate Medicare prescription drug prices.

Whereas, The Medicare Part D program provides prescription drug coverage for more than 37 million Americans age 65 and older and for certain individuals with disabilities; and

Whereas, The Part D program cost nearly $70 billion in calendar year 2013, including approximately $10 billion in premiums paid by participants and $9 billion in payments from state governments; and

Whereas, The prices charged by manufacturers for many prescription drugs are extraordinarily high, sometimes costing hundreds of thousands of dollars per year; and

Whereas, Since the establishment of the Part D program in 2003, federal law has prohibited the federal government from using its purchasing power to negotiate lower prices for prescription drugs, instead relying on private contractors with less market power than the entire Medicaid program; and

Whereas, Negotiating prices for prescription drugs is a standard practice in private prescription drug plans; and

Whereas, Other government entities, such as state Medicaid agencies and the Department of Veterans’ Affairs, negotiate with drug manufacturers for lower prices; and

Whereas, Efforts by the private insurance plans that administer the Part D program to negotiate lower prices have proven to be far less effective than Medicaid’s practice of bargaining for discounts, resulting in higher prices paid by Medicare recipients and taxpayers; and

Whereas, The Congressional Budget Office has estimated that granting Medicare the same price rebates that Medicaid receives would save $166 billion over ten years; and

Whereas, Nearly every other developed nation in the world regulates the prices for prescription drugs, resulting in lower prices for their governments and citizens; and

Whereas, The Center for Economic and Policy Research has estimated that savings of $300 billion to more than $700 billion are possible if Medicare were to reduce its prices to the levels paid by other governments; and

Whereas, The Part D program has been an enormous windfall for drug manufacturers, who are under no obligation to invest their earning in further research and development; and

Whereas, The benefits of limiting unnecessary spending by the federal and state governments, and of reducing costs for America’s senior citizens and other Medicare recipients from excessive premium costs, far outweigh the uncertain benefits of paying the prices charged by manufacturers; now, therefore,

Be It Resolved by the General Assembly of the State of New Jersey (the Senate concurring):

1. The Legislature of this State respectfully urges the Congress and the President of the United States to require the federal government to negotiate Medicare prescription drug prices.

2. Copies of this resolution, as filed with the Secretary of State, shall be transmitted by the Clerk of the General Assembly or the Secretary of the Senate to the presiding officers of the United States Congress, every member of the United States Congress elected from this State, and the President of the United States.

STATEMENT

This concurrent resolution urges the Congress and the President of the United States to require the federal government to negotiate Medicare prescription drug prices.

Under current federal law, Medicare is prohibited from negotiating lower prices for drugs with manufacturers, regardless of the sometimes enormous prices that manufacturers charge. Instead, private prescription drug plans that administer benefits from Medicare recipients each negotiate separately, which has proven to be less effective at obtaining lower prices than the system used in Medicaid. By using the full purchasing power of the federal government to negotiate for lower prices, Medicare could substantially reduce costs to taxpayers and Medicare recipients.