WASHINGTON, D.C. – State governments could save as much as $73 billion cumulatively over the next ten years if the federal government were to negotiate Medicare prescription drug prices, according to the Center for Economic and Policy Research (CEPR).
Each state’s individual substantial savings are cataloged in “State Savings with an Efficient Medicare Prescription Drug Benefit.” The authors draw from a previous CEPR report that focuses on potential savings to the federal government if Medicare drug costs were negotiated. The group estimates that New Jersey could save between $1 billion and $2.4 billion over the next decade.
Compared to the residents of other wealthy nations, Americans pay far higher prices for prescription drugs. The reason that people in other countries spent so much less is that their governments negotiate prescription drug prices with the pharmaceutical industry.
“The United States was projected to spend over $880 per person on prescription drugs in 2012,” said Nicole Woo, director of Domestic Policy at CEPR and an author of the new issue brief. “Other nations spend significantly less, ranging from around 70 cents in Canada for each U.S. dollar to 35 cents per dollar in Denmark.”
Applying both a high- and low- savings scenario that mirrors the savings on prescription drug spending in Canada and Denmark, the authors show that California would see the most in potential savings – between $3.3 and $7.8 billion over ten years. Even those states with the least in potential savings — Wyoming, North Dakota and Vermont – could still save tens of millions of dollars over the next decade.