NEW YORK (Reuters) - A vast majority of Americans say the Medicare health program for the elderly should be able to negotiate with drug companies to set lower medication prices, a practice currently prohibited by law, according to a survey released on Friday.

The poll conducted by the Kaiser Family Foundation found that 87 percent of people surveyed want Medicare to have the authority to press drugmakers for greater discounts. The skyrocketing prices for crucial medicines have hit both health insurers and consumers, who are being asked to cover a higher proportion of their medications’ cost.

"People don't understand why these drugs cost so much, and they don't understand why, in America, you can't negotiate for a better price," said Mollyann Brodie, executive director of public opinion and survey research at Kaiser Family Foundation.

Efforts to allow Medicare to negotiate drug prices have not been successful, due to opposition over government interference in the marketplace. Drug manufacturers say their prices reflect the billions of dollars they spend in research and development, both for treatments that are approved and the many more that fail.

Previous Kaiser polls underlined other frustrations over drug costs. A top priority for Americans in April was making drugs affordable for people with chronic conditions like diabetes.

In a June poll,73 percent of participants thought prescription drug prices were unreasonable. Over three-quarters of those people said it was because manufacturers set prices too high.

Public dissatisfaction has been on the rise since a controversy last year over Gilead Sciences Inc's novel hepatitis C cure. The drug, Sovaldi, came with a list price of over $80,000, or $1,000 for a single pill.

Insurers and state health officials warned that treating a majority of U.S. hepatitis C patients could cost several hundred billion dollars and bankrupt local budgets. When a competing medicine from AbbVie Inc was approved late last year, private health insurers pressured both companies to lower prices significantly.

"Sovaldi got people so up in arms about pricing where you even have Republican members of Congress saying it's ridiculous," said Ipsita Smolinski, managing director of healthcare consulting firm Capitol Street.

Smolinski believes it would take a leadership change in Congress, from Republican to Democratic control, to alter Medicare's authority over drug prices.

She also expects America’s Health Insurance Plans, an industry lobby group which helped lead the outcry over Sovaldi, to bring further pressure to bear on drugmakers. AHIP named Marilyn Tavenner, the former head of the government’s Centers for Medicare and Medicaid Services, as chief executive this week.

The latest Kaiser poll was conducted between April 23 to May 31 among 1,849 adults, with a margin of error of plus or minus 3 percent.

For nearly 50 years, Medicare has provided insurance coverage for Americans from age 65 and the disabled. Medicaid, a joint state and federal program, helps people with low incomes. Combined, they provide coverage for over 111 million people.

(Reporting by Kylie Gumpert; Editing by Michele Gershberg and Andrew Hay)