The institute’s report, according to the group’s news release, “shows that the primary source of waste in the drug plan is the decision, dictated by drug and insurance industry lobbyists, to provide coverage through private providers and to prohibit Medicare from using its leverage as a bulk buyer to negotiate lower prices.”
“Risk-bearing drug plans will obtain substantial savings on their own,” the CBO said, “and in particular will probably do so by establishing relatively narrow lists of lower-cost preferred drugs and steering beneficiaries‘ use toward those drugs.”

CBO found that “pharmaceutical manufacturers are much less willing to give large private purchasers steep discounts off the wholesale price when they also have to give medicaid access to the same low price.”
“It’s unfortunate Congress did not give that authority,” said Dave Campana, medicaid pharmacy program manager for the state. “With the huge volume that Medicare would have, they would just be able to get so much better prices.”.

Read more on this topic.