For Immediate Release


Alan Barber (202) 293-5380 x115

States Could Save $73 Billion by Negotiating Medicare Drug Prices

WASHINGTON - 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 a new issue brief by the Center for Economic and Policy Research (CEPR).  As policy makers across the nation consider various state and federal budget options, they and the American public should be made aware of these significant potential savings.

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.

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. Florida, New York, Texas, Pennsylvania, Ohio and Illinois could save at least $1 billion per year each over the same time period. 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.

The full list of savings for each state can be found here.


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The Center for Economic and Policy Research (CEPR) was established in 1999 to promote democratic debate on the most important economic and social issues that affect people's lives. In order for citizens to effectively exercise their voices in a democracy, they should be informed about the problems and choices that they face. CEPR is committed to presenting issues in an accurate and understandable manner, so that the public is better prepared to choose among the various policy options.

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