Earlier quoted context omitted.
> It was part of the Medicare part D program - and likely put in via lobbying of Drug companies to politicians: The prices are still negotiated. They're negotiated by the plans that provide Medicare Part D, rather than determined unilaterally by Medicare itself (which is what happens for Medicare A and B reimbursement rates).
Any private drug negotiator is going to be in a terrible position because they don't have 100% of the market. They can't walk away, the drugs will just flow through another private drug body. The drug makers have no reason to give a discount if the drugs will be sold under plan distributor B vs distributor A. When you compare prices in the US vs nations with governmental bodies controlling drug prices, you can valida…
Having 100% of the market is the definition of a monopsony. That's bad for both patients (in the long run) and pharmaceutical companies (in the short run).
In any case, even an ostensible monopsony pharmaceutical purchaser can't really just "walk away", because so so many of the drugs that they're purchasing are deemed essential. Let's say the government just said, "sorry, you've been taking this critical blood-pressure medication since it was released seven years ago, but now we're not going to pay for it, because we're taking a hard-line stance in our negotiation with Pfizer".
At that point, there are two possibilities:
1) Patients stop taking the drug, and they die
2) Patients pay for the drug out-of-pocket (if they can afford it), and the remaining patients die.
#1 is possible, but a political disaster. #2 is a no longer a monopsony, which defeats the whole premise of "having 100% of the market".