Ah, another Christmas Eve story that (not surprisingly) has gotten little attention. Most of the ire directed against the phony health care reform bill focuses on how it further enriches a fat and undeserving health insurance industry. The media has given less attention to another group that has thrown plenty of lobbying dollars at getting its needs met through favorable legislation, namely, Big Pharma. And its investment appears primed to pay off particularly well in this case. I now get one of my prescriptions from Australia. Even with the dollar lower than it was a few years ago and factoring in the cost of international shipping, the price is less than 1/4 of what it would cost here. The drug companies clearly are not selling their products in other advanced economies at a loss. This price disparity illustrates how badly the industry has been able to skew the playing field against the consumer here.
Generics at least apply some pressure on pharmaceutical companies (which despite their howls about their need to invest, spend more on marketing than R&D, and have not doubt they do everything in their power to classify expenses as R&D). But given the egregious rent-seeking of this industry, more aggressive measures are warranted (but have zero chance of happening).
Obama is looking more and more like W’s third term, with the occasional empty gesture to the peasants. He is not merely failing to hold the line, but is actively engaged in retreat, as far as the average citizen is concerned, and devoting his considerable rhetorical skills to trying to sell it as victory. From Reuters (hat tip reader John D):
The hurdles include extensive protections against generic versions of pricey biotech medicines, an incentive for Medicare recipients to use more brand-name drugs, and a possible end to payments from brandname makers to delay the launch of copy-cat medicines…
President Barack Obama has often pointed to generics as a key way to cut costs, but big pharmaceutical makers such as Pfizer and Merck came to lawmakers and the White House with an $80 billion, 10-year pact to cut prices and pay additional taxes to help fund the expansion of health insurance coverage.
Yves here. I would love to be able to obtain the internal documents of major pharmaceutical companies that devised this scheme as to how they came up with this arrangement, and how it compares with their forecasts were there no law change. I wager that these supposed cuts merely commit them to price reductions that these companies expected to face regardless as certain drugs came off patent. I would further bet that this $80 billion reduction is offset in part, if not to a considerable degree, by the hobbling of generics.