Kaiser Permanente CEO Bernard Tyson said on Friday he does not believe a free market for prescription drugs truly exists in the United States.
"I cannot rationalize how much we're paying for drugs," Tyson told CNBC's "Squawk Box" at the World Economic Forum in Davos, Switzerland.
Tyson said his view is the government has its hands tied on whether or not it can negotiate prices for Medicare.
Medicare is prohibited from negotiating with drugmakers to secure lower prescription prices. That stipulation is built into the government's program to subsidize drug costs for Medicare beneficiaries.
"When the prices are established with the government, it therefore becomes the ceiling, if you will, and so I can't go in and negotiate a lower price because then they'll have to give that price to the government and everyone else," he said.