[objclxt]

> In the US, you have no monopoly on the healthcare side, but the drug companies have a monopoly on the drugs they produce.

In a way there is a monopoly on the healthcare side in the US, but it only impacts a certain segment of the population. Medicare is able to negotiate significant discounts on the cost of healthcare compared to private insurers precisely because for so many people it is the de facto provider.

There was a really interesting Planet Money podcast a month or so ago about healthcare costs in the US which covered why the difference between private insurers and Medicare is so great: http://www.npr.org/blogs/money/2013/02/26/172996963/episode-...

[rdl]

Medicare/Medicaid are specifically not allowed to bargain on drug prices, though. They are a monopsony for hospital/doctor services, with full pricing power, for the old and poor, but pay market prices for drugs by law.

[refurb]

More accurately, Medicare is not allowed to negotiate for drug prices, however, the don't pay more than the average selling price for a drug (ASP).

Medicaid is certainly allowed to negotiate over drug prices. Medicaid gets an automatic 23% off the drug price and if the states can get an even bigger discount, they often get to keep it.