This opinion piece appeared in The Hill, you can read the full piece here.

The Trump Administration’s most recent effort to fight high prices for prescription drugs takes a small step in the right direction. A recent new rule issued by Health and Human Services will use market-based competition to help lower the cost of prescription drugs for the more market- sensitive Medicare Advantage program.

Medical care providers have a financial incentive to prescribe expensive medicines because they often earn a commission based on the value of the drugs they prescribe. Thus, the cheaper the drug, the less commission the care provider stands to earn. Human nature and profit motive being what they are, health care providers often underutilize cheaper, but effective drugs in favor of their more expensive alternatives. Ignoring or under-prescribing less expensive drugs costs Medicare—and taxpayers—money.

With its over-sized government subsidies, Medicare insulates patients from the high prices of their prescribed medications, removing a powerful force from the prescription drug market— customer sticker-shock. Medicare’s subsidies tend to mean that patients themselves only pay a little more for the expensive drugs than they would for the less expensive alternative. But that leaves the taxpayers and a debt-laden Medicare program to cover the difference.

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