Obama and the Democrats’ sellout on health care is hardly any secret, but today’s news of an outright backroom deal guaranteeing drugmakers control over pricing is one for the history books. Even the Republican right, so detested by liberals, doesn’t get down for big business quite like this.
Among other things, this slimy arrangement with Billy Tauzin, head of Big Pharma’s trade association PHRMA, throws American antitrust law out the window. This is a clearcut cartel-style arrangement, openly sanctioned by the President. All this baloney about competitive markets! It is patterned after the international oil cartel of the early part of the last century, which divvied up Middle East oil, and the U.S. automaker cartel to prevent instllation of safety devices in the 1950s and 60s.
As it now stands, there is no control over drug pricing in the United States, save for a gesture in that direction under the Medicare Part D prescription drug insurance plan for the elderly. The system currently allows drug firms to set prices they charge for prescription drugs under Medicare in what amount to sweetheart deals with the private insurance companies that actually handle the insurance under the Medicare plan. Because drug pricing and insurance costs are set—basically at will—by these two industries, critics have demanded the government step in and set prices. Those demands haven’t gone anywhere, but never has there been an explicit announcement from on high about the deal. It’s always been just another one of Washington politics dirty little secrets.
Here is the way the New York Times reported it this morning, including an extraordinary public concession from the President.
“We were assured : ‘We need somebody to come in first. If you come in first, you will have a rock-solid deal,’ ” Billy Tauzin, the former Republican House member from Louisiana who now leads the pharmaceutical trade group, said Wednesday. “Who is ever going to go into a deal with the White House again if they don’t keep their word? You are just going to duke it out instead.”
A deputy White House chief of staff, Jim Messina, confirmed Mr. Tauzin’s account of the deal in an e-mail message on Wednesday night.“The president encouraged this approach,” Mr. Messina wrote. “He wanted to bring all the parties to the table to discuss health insurance reform.
As for $80 billion drug company voluntary gift to the President to help achieve the appearance of a bi-partisan deal for health care reform, it’s all smoke and mirrors. No more than $20 billion is to go to a widely hailed plan to help Medicare recipients by subsidizing their drugs while they are in the Medicare coverage gap known as the “donut hole.” The rest is to be doled out according to some yet to be known plan set forth by the drug makers.
In addition, as I’ve written before, the money to “help” the elderly is limited to brand name drugs, many of them coming off patent and about to go generic. The industry wants to keep on selling oldsters the expensive brand names, but Medicare recipients could save money under the existing plan by buying generic equivalents when they fall into the donut hole. Under the Big Pharma plan, elderly people who choose the name brand drug will get a subsidy–thus discouraging them from switching to generics. And of course, once they come out of the coverage gap and they’ll be charged full price once again, and the government will pay up. In the long run, it’s only likely to increase the drug companies’ private profits, at public expense. So once again, the “concessions” are all on one side.