NCPA - National Center for Policy Analysis

THE MEDICARE DEBATE HEATS UP

February 8, 2006

The proposal by the American Association of Retired People (AARP) to create a National Drug Formulary similar to the one operated by the Veterans Affairs (VA) health system, would have the unfortunate consequence of scrapping private health plans, says Robert Goldberg, director of the Manhattan Institute's Center for Medical Progress.

AARP's goal, says Goldberg, is not just to control drug prices but also to get private plans out of the drug-benefit business in order to make life simpler for seniors.

According to Goldberg, a National Formulary is a bad idea because:

  • It would limit the choices of medicines, and by using "evidence-based" research, it could choose only the best and most cost-effective drugs while scraping the rest.
  • Under the existing VA formulary, every new drug approved by the Food and Drug Administration (FDA) is put on hold for at least a year; if and when the VA actually adds the drug, a patient's access can be restricted.
  • Most VA drugs are more than eight years old and this use of older drugs may have reduced life expectancy by 2.04 months.
  • Since 2000, 19 percent of prescription drugs have been approved, and from 1990 to 2000, only 38 percent of prescription drugs were approved.

Why would any company or consumer put up with the hassle of getting government go-ahead when they can immediately seek out solutions in the private sector? Medicare reform and HSAs make such experimentation broadly available and make government increasingly irrelevant, says Goldberg.

Source: Robert Goldberg, "Thwart Hillarycare 2006," Washington Times, February 2, 2006.

 

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