Part D plans are privately administered by companies that are supposed to compete with each other. The prices aren't just whatever the drug companies want.
“The average Medicare beneficiary has a choice of 54 Medicare plans with Part D drug coverage in 2022, including 23 Medicare stand-alone drug plans and 31 Medicare advantage drug plans.
You’re confusing two different things: monopsony power versus competitive pricing.
Monopsony power is when the market dominance of a buyer allows it to drive prices below the efficient level. But monopsony prices aren’t necessarily efficient prices. Wal-Mart’s pricing power, for example, has well demonstrated negative impacts on the upstream supply chain.
A competitive market, with numerous buyers and sellers, by contrast, will have higher prices than a market with a monopsony buyer. But at least in theory those prices will be efficient.
The fact is that a manufacturer sells a product at 80% gross margin to a distributor. Attempting to negotiate with the manufacturer is illegal. The resellers of said product go through an intense competitive process and earn a 2-4% margin. So the plans will offer cheap loss leaders… “free metformin!” and make it up elsewhere. Meanwhile, the government is paying $5/pill for some amoxicillin reformulation or whatever.
What “narrative” are you upset about again? Personally, I don’t think getting a stream of risk-free government guaranteed business should yield higher margins than coke dealers.
This is Medicare Part D - the plans are administered by private insurance companies - Medicare just pays the premiums, they don't pay directly for the drugs.. Private insurers compete for Medicare patients to sign up for their plans.
Private insurers do negotiate directly with manufacturers. Studies I've seen show they get similar (or better!) price they do with their private insurance plans.
The narrative I'm complaining about is - "there is no negotiation". This comments are typically by people who don't even know how it works.
