This is by design. Patents that the government provides to drug companies necessarily create monopolies. Therefore “we need another solution if we want private plans to get lower prices,” Mr. Bagley said.

Direct Deals With Drug Companies

Medicare could flex its market power by negotiating directly with drug manufacturers. There have been calls for Medicare to do so, and polling shows that a majority of Americans favor it.

Other government programs, including Medicaid and the Department of Veterans Affairs, obtain steeper discounts than Medicare drug plans. In part this is because of government regulations that mandate price reductions. But those programs also negotiate directly with manufacturers, obtaining additional discounts. For example, the V.A. pays about 40 percent less for drugs than Medicare drug plans do.

“The V.A. obtains larger discounts in part because it can — and does — institute a more restrictive formulary than Medicare, meaning some drugs that are more costly but no better than alternatives are not as easily obtained in the V.A. as they are from a Medicare plan,” Dr. Kesselheim said.

Ms. Scott Morton said: “Direct negotiation by Medicare would only be effective if it could say, ‘No, we won’t cover your product’ to a drug manufacturer. Is that really plausible? I’m not sure that’s what Medicare beneficiaries would want.”

Medicare could save money if it could negotiate with manufacturers and exclude high-priced drugs. That would benefit taxpayers, but it would mean reduced access to drugs for the program’s current beneficiaries and slower innovation of drugs in the future.

“If Medicare doesn’t pay attention to a drug’s benefits during those negotiations, the pharmaceutical industry won’t have the right incentives to develop the drugs we need most,” Mr. Bagley said.