Apparently they do not switch often enough to get US medical costs down to the level of other industrialized nations. But that metric it is hardly an efficient market.
Yes, price competition only goes so far when the underlying thing being sold is expensive and buyers don't have enough power to squeeze suppliers. Hence the CMS comment. Also, switching costs aren't zero (new cards, employee education, etc.), and is be re-evaluated only annually.
The question in this subthread is: do insurers have an incentive to negotiate pharma prices down. The answer is they do have an incentive and they do negotiate prices down.
