Jonathan Cohn: New Evidence of Pharma's Sweetheart Deal

[flpoljunkie]

New Evidence of Pharma's Sweetheart Deal

Jonathan Cohn November 10, 2009

Critics have complained that a drug industry got a sweetheart deal when it struck a bargain with the White House and Senate Finance Committee over health care reform.

There’s new reason to think those critics were right.

It comes from an October forecast by IMS Health <1>, a respected global research and consulting firm. The report, which IMS distributed to clients and which a source provided, projects that the drug industry will see average annual growth of 3.5 percent between 2008 and 2013.

Back in March, IMS had projected no growth at all during that same five-year stretch. In fact, it projected the drug business would actually contract slightly--with negative annual growth of 0.01 percent.

What changed? A major factor, according to IMS, was the emerging details of health care reform.

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. As a result, IMS believes, pharmaceutical companies would be able to raise their prices--enough to boost revenue significantly: "If this bill is implemented," the report concludes on page 138, "an increase in prices on new drugs can be expected."

more...

http://www.tnr.com/blog/the-treatment/new-evidence-pharmas-sweetheart-deal

[midnight]

1. Capitalism could not be applied to the elite. They could never survive the competition.

[Demeter]

2. Hell, they don't permit any kind of rules to touch them

Surprised if they even acknowledge gravity's force.

edit: of course, that's what plastic surgery is for!

[IndianaGreen]

3. You do know the apologists deny there was ever such a PhRMA deal

Lots of Kool-Aid around here.

[quantass]

4. God i am SOOO Glad to be Canadian!

Americans need to realize Washington and the WH are NOT on their side and it will take a European-style revolt in the streets by the masse before REAL change can happen..until then...its tea parties and cocktails for those in the know.

I dont blame Big Pharma, nor do i the Health Industry...they are doing what they should..making money by any means...They are not the bad guys...the bad guys is and always has been the mess we call the political system of America...if you allow clearly stupid things like lobbyists to do their thing on the hill of course you are going to get what we have. It's all about the money and the WH is no different..no matter who is in office.

For me i've settled for a sliver of change for Americans now that i have come to realize the near impossibility of any real change...i hope one day the American people will revolt and not rely on what tv tells them to do.

[pleah]

5. K&R

[ProSense]

6. People need to read the details before making assumptions

"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.

link

(emphasis added)

Closing the donut hole is huge. Add to that the savings the the federal government would realize. Bottom line is that they seem to be spinnng the fact that more people will be in the system as a negative.

[IndianaGreen]

7. You know full well that Rahm & Co made a deal with PhRMA

After denying for weeks that such a deal even existed, you are now reduced to telling us that this non-deal deal is a good thing to us.

:puke:

[ProSense]

8. The deal was reported when it was made. It's not a secret: $80 billion in savings.

Puke all you want to, facts are facts.

[IndianaGreen]

9. You and your sidekick denied there was ever such a deal

and you both attacked posters for posting threads on the deal.

Are you now a revisionist as well?

[ProSense]

10. Sidekick? No one ever said there was no deal. The bogus claim was that the deal was secret.

That's simply bogus.

[IndianaGreen]

11. Don't get Talmudic now!

No matter how you slice it, the fact remains that you attacked those that posted stories about the PhRMA on the grounds that there was no such deal made. Now you are trumpeting the deal you said did not exist, as a wonderful thing that PhRMA will do for the people with the blessing of the White House.

[ProSense]

12. Getting a little desperate? n/t

[IndianaGreen]

13. Your role in DU is to play Squealer

Those that have read Orwell's Animal Farm would appreciate what I am saying.