US taxpayers could save as much as $541 billion by 2022 if Congress and President Obama enabled Medicare to negotiate drug prices like other wealthy countries, it is claimed.

As well as making savings to the federal government of $230-$541 billion over the period, having Medicare negotiate drug prices could save state governments as much as $72 billion and allow consumers to save up to $112 billion by 2022, according to a new analysis from the Center for Economic and Policy Research (CEPR).

The study estimates that, for every dollar paid in the US per person for medicines, Canada spends 70 cents, the UK 40 cents and Denmark 45 cents.

A grassroots campaign was launched yesterday in Washington DC, supported by nearly 300 organisations nationwide, to educate the public and legislators about the contribution which supporters say that enabling Medicare to negotiate drug prices could make to reducing the US budget deficit.

"It's ridiculous for Medicare to be paying drug companies two and three times as much money for drugs as other countries at a time when we are cutting essential programmes," said Dean Baker, co-director of CEPR and author of the analysis. "This fix alone would go far towards hitting anyone's deficit target."

The campaign is supported by the state of Minnesota's two Democratic Senators, Amy Klobuchar and Al Franken, who have both introduced legislation to address to issue of medicines affordability for Medicare beneficiaries (those aged 65 and over and some disabled people).

Sen Klobuchar's Medicare Prescription Drug Price Negotiation Act would allow the agency to negotiate lower prices just as the Veterans Administration currently does. "This already-existing process has proven to be highly effective, and there is no reason these practices cannot be adopted by Medicare," she says, estimating that the government would save up to $24 billion every year in this way.

The proposal's advocates say they are expecting strong opposition. "The GOP [Republican Party) would rather cut life-saving benefits for seniors than bring some of the most profitable companies on earth to the negotiating table," said Ethan Rome, executive director of the group Health Care for America Now (HCAN), which is coordinating legislative and field activities for the campaign in states across the US.

The campaigners also say that while opponents could claim that lower prices would sap much of the revenues and incentives for financing R&D for new drugs, they would also disincentivise improper marketing of medicines and misrepresentation of the quality and safety of drugs.

"There is a strong argument for developing a more efficient mechanism for financing drug research, and there is little reason for people in the United States to continue to overpay for a system that serves us poorly," says CEPR.

- Meantime, the Bureau of Economic Analysis (BEA) has reported that US prescription drug prices have starting rising again. They increased 3.6% overall in 2012, or twice the 1.7% rate of inflation for the year, it says.