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To understand the policy challenge created by repeal of the non-interference clause,
consider this simple example. Acme Drug Company brings a drug
to the market as a single source innovator. Essentially, they
are without generic competition. Acme prices their drug at
$100. Random Insurance Company wants to purchase the drug at
$90 for beneficiaries in their Medicare Advantage Prescription Drug
Plan. Currently, many would argue that the flaw in the
Medicare drug payment system is that Acme has the leverage to tell
Random 'no' to their request for a lower drug price.
So what exactly does the entry into the conversation of "government negotiation"
entail? If CMS or some other duly appointed federal authority
steps in between Acme and Random, what power does it have?
This is the challenge of non-interference repeal. Unless you
assume that the intervention of federal authority brings with it
some ability to force Acme to lower its price, repealing
non-interference, in and of itself, is meaningless. The
federal authority can ask Acme nicely. The federal authority
can say "pretty please." But if Acme retains the
right to say "$100," the federal authority produces no
savings to the taxpayer.
For repeal of the non-interference clause to be
meaningful, the federal authority must be invested with tools to
force Acme to lower its price. The mechanisms the federal
authority require involve potentially uncomfortable policy
choices. Repealing the non-interference clause is not
enough. Make no mistake about it: repealing non-interference
in a way that achieves lower drug pricing requires providing the
federal government with extensive powers and the mandate to use
them.
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