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Pharma Deal With White House on Course to Net Industry Billions
The deal struck between the pharmaceutical lobby, the White House and Senate Democrats has drastically improved Big Pharma's expected profits, a private industry report finds.
The deal struck between the pharmaceutical lobby, the White House and Senate Democrats has drastically improved Big Pharma's expected profits, a private industry report finds. (flickr photo by Brooks Elliott) IMS Health, a company that supplies the pharmaceutical companies
with sales data, predicts that new health reform legislation --
combined with a projected upswing in the economy -- will result in a
net gain of more than $137 billion in total market sales over the next
four years. The new assessment was contained in document obtained by
the Huffington Post.
Back in March, that same firm projected a compound annual growth rate of -0.1 percent in the period of 2008 through 2013. In October, with the general outlines of health care reform clearly in place, it revised that number to a positive 3.5 percent for over the same period.
What happened in those seven months? The economy started looking up, for one, as did the overall prospects of health care reform. But the industry also won a major lobbying victory.
PhRMA, the lobby entity for the industry's heavy hitters, reached a secret deal with the White House and the Senate Finance Committee in June. As detailed in a memo first published by The Huffington Post, the Obama administration agreed to oppose congressional efforts to use government leverage to bargain for lower drug prices. The White House also agreed not to shift some drugs from Medicare Part B to Medicare Part D, which would have cost the industry billions in reduced reimbursements. All this in exchange for $80 billion over ten years to help push for reform.
The Senate version of the healthcare bill still conforms to the deal (that the White House has still never officially confirmed). The House bill is in the same ballpark, although it would cost Big Pharma an extra $14 billion.
The IMS, in its revised October findings, did not reference the deal specifically, but rather made note of what it called a "NEW EVENT" -- mainly that health care reform "could lead to higher priced branded products and increased healthcare coverage across the USA."
"Branded drug price increases are expected to continue," the firm concluded, before citing the specific reforms of the PhRMA deal.
America's Affordable Health Choices Act of 2009 (HR 3200) has proposed several changes to the Medicare Part D program that would impact federal spending. Firstly, it would create a new rebate program that would require manufacturers of brand-name drugs to pay the federal government a rebate equaling 15% of the average manufacturer price. The finer details of the rebate will be determined as the reform legislation develops. Secondly, it would phase out the doughnut hole by simultaneously extending the benefits initial coverage limit and lowering the catastrophe threshold at specified rates leading to removal of the doughnut hole by 2022. Thirdly, as the doughnut hole is being phased out drug makers would be required to provide beneficiaries who are not eligible for the low-income subsidiary programme with a 50% discount on their spending in the doughnut hole for covered branded drugs. This initiative could create new business for pharmaceutical companies and also give seniors a price break, but only if they were paying full price on the brand product in the first instance. For pharmaceutical companies the agreement will lead to a loss if the senior was paying full price, but a win if the senior was not buying brand products at all. By making branded drugs in the doughnut hole more affordable patients may be able to afford to continue with treatment.
As explained by The New Republic's Jonathan Cohn (who got the IMS document first):
Health reform, as currently envisioned, wouldn't merely bring coverage to the uninsured. It would also fill in the "donut hole" in Medicare Part D--the gap in coverage that leaves beneficiaries with serious health problems paying for hundred if not thousands of dollars in out-of-pocket prescription costs.In addition, because it will take several years to close the donut hole, reform relies on voluntary discounts from the pharmaceutical industry to make drugs more affordable in the intervening years. But those discounts would apply only to name-brand drugs, not generics.
Put it all together, and you have more demand for name-brand drugs.
The structure of health care reform, as IMS goes on to note, will have benefits for the federal government, which could save an estimated $30 billion from 2010 through 2019. Patients, meanwhile, would be paying higher premiums -- roughly five percent more by 2011 -- in return for what the report calls greater "protection against incurring higher drug costs." The real beneficiaries of reform, however, would evidently be the pharmaceutical industry.
IMS's conclusions are one of the clearest affirmations yet of various media reports that PhRMA is coming out of its negotiations with the White House and the Senate as a big winner -- though, as Cohn notes, the numbers IMS uses are simply projections and they may not necessarily bear out.
In a twist of sorts, it was the March IMS study that served as a small pillar in PhRMA's push to get a deal with the White House and Senate Democrats in the first place. In the press release touting its $80 billion commitment, the lobbying entity, along with affiliated institutions, warned that, "Medicines have already begun to play a key role in bending the cost curve in the U.S,"
"In 2009, IMS projects that the U.S. market for prescription medicines will contract, declining 1-2% below 2008 levels. Going forward till 2014, IMS projects annual growth rate for prescription medicines to remain essentially flat."
At the time, PhRMA was making the case that the $80 billion it was offering for reform was a major concession to the White House and Senate Dems. Compared to the new numbers, however, it doesn't look like such a big concession anymore.
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23 Comments so far
Show AllAs it is shaping up now, the most prominent group of people who will be proven to have been somewhat accurate in their assessment of the outcome of this fraudulent, democrat driven corruption will be the totally misinformed "Teabaggers".
Their biggest fear was that this "government" would make healthcare more complicated, more expensive, and more corrupt.
This mess was DELIBERATELY created by the democrats and the most disgusting aspect of it is that the republicans will be credited with trying to stop it.
If you lived in a town where the democrats and the republicans were the doctors, you would surely seek medical attention elsewhere (if you valued your life).
How could any person/s (politicians) pretending to want to serve the country go to sleep at night with the contradiction:
"the Obama administration agreed to oppose congressional efforts to use government leverage to bargain for lower drug prices"
The government is supposed to be working on our behalf and making our lives better. Isn't that why people form governments in the first place?
"the Obama administration agreed to oppose congressional efforts to use government leverage to bargain for lower drug prices"
This, of course, is a perfect example of fascism in action.
I've never formed a government, but it would seem the one we have now was formed to take possession and advantage of a huge, largely unpopulated and untouched virgin continent many, many miles from the home office...
Stein sez: "Patients, meanwhile, would be paying higher premiums -- roughly five percent more by 2011 -- in return for what the report calls greater "protection against incurring higher drug costs."
***
Read that again. Slowly and carefully.
Patients will pay more as "protection" against higher costs -- ie, paying more.
Brings to mind another organization operating in the US that sells "protection" as part of its, um, product line.
Time to start the OPhRMA contraindicated treatment: the BHOWL (Barack Hussein Obama's Worth Less) Movement of ALL of DEM OUT! Single-payer or SINGLE TERM!!
Yeah, let's vote the bumbs out...and bring back the Republicans!
So much for the transparent government Obama promised us.
This disgraceful bit of legislation was passed by the Republican-controlled congress in 2003. The Democrats, if they existed, would have a chance to reform it in 2009.
It is abuse of office to increase taxes being diverted to an industry while doing nothing to stop that industry from increasing its profits. It is as if we are being told to fill a bucket with holes in it.
I saw part of a PBS documentary last night in which they looked at how other nations have handled healthcare. One was Switzerland, in which citizens are mandated to buy private insurance, BUT those insurance companies' profits are closely regulated. Once you've made insurance non-profit and regulated, you might as well make it a government run public utility, but even if you leave the companies in, you have to regulate their profits. No other country in the world has done what our corporate congress now proposes. This is a boondoggle of galactic proportions.
And read the IMS finding carefully:
-- "it would create a new rebate program that would require manufacturers of brand-name drugs to pay the federal government a rebate equaling 15% of the average manufacturer price." In other words, it would give a kickback to the government co-conspirators. Industry could both write off that cost as well as increase other prices to pay for it.
-- "The finer details of the rebate will be determined as the reform legislation develops." Translation: as good as this is, our lobbyists will make it more profitable for us when no one is looking.
-- "it would phase out the doughnut hole ... by 2022." Or when hell freezes over, which ever comes first.
-- "a 50% discount on their spending in the doughnut hole for covered branded drugs. ... By making branded drugs in the doughnut hole more affordable patients may be able to afford to continue with treatment." If we rip them off a little bit less, they MAY BE ABLE TO AFFORD TO CONTINUE WITH TREATMENT... or not.
The only treatment we can't afford to continue is the pillaging and plundering of the nation's welfare by the collusion between business and government.
"Branded drug price increases are expected to continue"
Oh look, change we can believe in. An escalation of public theft/plunder in the healthcare/finance sectors on the watch of the lesser evil. Before it was escalation of public theft/plunder in the military and commodities sectors on the watch of the greater evil. Lesser evil but just as lucrative a gravy train.
A recent post on another thread gave a chart of the profit percentages for some common prescription drugs ---- I cannot recall all of them --- perhaps someone might re-post on this thread, but 3000% was the low range of the markups, and it went to as best I can recall somewhere in the 12,000% range---- while Pharma is fond of claiming "Research Costs" these are mostly borne by the taxpayer--- when a new drug is developed, Pharma corps. are allowed to manufacture and market ---- Oh and let us not forget ---- many are marketed with much pressure and kickbacks to doctors to prescribe for both approved and unapproved usage. And let us not forget the one that was finally pulled a couple of years ago when it was proven that many, many had died even after the manufacturer knew people were dying from taking it. May these bastards all fry in hell.
"...the most prominent group of people who will be proven to have been somewhat accurate in their assessment of the outcome of this fraudulent, democrat driven corruption will be the totally misinformed "Teabaggers".–(Birdbrain Alley)
Will wonders never cease! This statement is as true as it is grotesquely ironic, but hardly surprising.
When right wing psychopaths can be seen to offer resistance to this unconscionable travesty– however misinformed by their wretched ignorance– what does that say about the 'progressives' who put Obama and the Democrats in office to begin with? And who are incapable of offering a concomitant resistance except through the ballot box and other 'pre-approved' methods.
What it says, like always, is that progressives will continue to vote for them again in the next elections. Such is their fealty to the very system that renders them irrelevant.
The grim truth here is what is tacitly obvious and what no one wants to contemplate: It is not only Obama and the Democrats who are corrupt but the American Progressive movement itself which is corrupted and in the throes of terminal decay.
It is broken and bereft of ideological cogency and a programmatic agenda sufficiently articulated enough to differentiate itself and break from the fascism it defaults to. –(Jill Bains)
Jill Bains ---- what would you suggest? The alternative seems to be self disenfranchisement. ???
"The alternative seems to be self disenfranchisement. ???" –(Donkey Hote)
For starters I would suggest facing up to the fact you have no 'franchise' to begin with. It is not a question of 'becoming' disenfranchised, since in truth, you already are.
Being "disenfranchised" in a morally bereft system– if it is accompanied by a categorical rejection of said system– is an incipient necessity; it is a good thing, not a bad thing.
American elections are illusions, no more than elaborate 'trompe l'oeils' offering the bad faith belief that one has a say in things. Attempting to develop a politics that unequivocally takes that reality as a given is a necessary first step.
The alternative to that is reenforcing the present incoherence and sanctioning it.
Emma Goldman once said, "If voting made a difference, it would be illegal."
At first sight one may believe this to be totally pessimistic, if not abjectly irresponsible, when in fact it is quite the opposite: One must embrace the totality of the darkness to be able to recognize a newly emerging light that is strong enough to dispel the darkness.
Voting in American elections is an exercise in self abasement if not self contempt; continuing to reference oneself by and through electoral 'events' is little more than a fool's game.
The philosophical abnegation of American Democracy is an essential place to start. And as Lenin once said "Lean. learn, and learn." –(Jill Bains)
thank you, Amfortas, I appreciate this piece very much...
There is nothing we can do. They have all the money, all the power, and the will to steal from us until we are reduced to slaves.
But they are stupid too. How can we buy their products when we have no money?
Good observation, Nie, but please do not despair ---- I have no magic solutions, but giving up hope of change is like suicide --- a permantent solution to a temporary problem. Historically, opressed people finally rise up, look at history, opressors cannot give up the habit, and ultimately, the opressed break it for them. It usually is not pretty, but it happens.
yes, or drink or eat when there's no more water or food...
"The economy started looking up" where?
The people who got the stolen hundreds of billions are doing alright, but RIP OFF does not spell RECOVERY.
Likewise, what Pharma offered was not a "concession;" it was a "bribe."
You know, it is probably time for someone to set up a business in pharmaceutical vacations across the border. Nip down, with the Rx if necessary, stock up, back up.
Of course, as usual, a lot of the sick, the poor, and the hard-working won't be able to take advantage.
Sadly, it's pretty hard to boycott your diabetes meds.
Waaait! I'm confused here. Is this the same deal that they made before all the healthcare brohaha when they promised - amidst sobs and crocodile tears - that they would give meds to the seniors and blah blah blah and Obama had the audacity to take it and try it to push it as being such a deal? Or this another deal on top of that deal? Man, I can't even keep track of the deals, deals on top of deals, deals and more deals, other deals, this deal, that deal...
Sen Joe Lieberman's wife is a Pharma lobbyist. Sen Chris Dodd's wife who has her own business and has the banking and Pharma
industries as clients who pay her hundreds of thousands a year.
Obama has endorsed both of these two senators.
Thanks to the Huffington Post for making this deal public.
I wonder how this will bode for the VA Healthcare system that presently does use its leverage to negotiate lower drug prices?
The numbers seem strange and suspicious to me. How much of the model projected profit arises simply from the pure stability and predictability the agreement created? What benefits might we obtain remote to the confines of the agreement. Whatever it might have been sure didn't get H1N1 vaccination done.