Proposal to limit drug pricing for Medicare

Bloomberg published an editorial reporting that House Speaker Pelosi has proposed legislation to limit how much Medicare pays for medications. Under current laws, Medicare is prohibited from negotiating drug pricing. The new legislation would like to limit Medicare's price for medications to 1.2 times the average price paid in certain other industrialized countries. In cases where a drug is not sold internationally, Medicare would like to receive the same pricing that state Medicaid programs receive.

This legislation seems unlikely to pass in the current political climate. However, the editorial pointed out that Congress's assessment is that even with the pricing limits in place, pharmaceutical companies would likely continue their pace of drug discovery, albeit modestly slower (2%-5% less than current efforts, versus the dramatic fallout often claimed by industry).