What the press refers to as “tweaks” in the new version of health care legislation would appear to hand Big Pharma a sizeable victory, allowing the companies to extend life times of brand name drugs by selling them at discounted prices within the Medicare drug plan.
The latest deal is once again being portrayed as a magnanimous gesture by the profitable pharmaceutical makers–and to help the poor guys out a little and lessen the strain on their stockholders’s pocketbooks, the government apparently will come in to pay the companies some of the dough they lose in providing discounts. To put it another way, it looks like the discounts aren’t really discounts at all. In the world of Congressional smoke and mirrors, they miraculously become a subsidy.
Government policy ought to push less expensive generic drugs into the marketplace. Mandating their preferred use by Medicare would be one small step in that direction. Generally speaking, the brand name drugs should be eliminated when their patents run out. The proposed legislation apparently will have the effect of lengthening the drug companies’ monopoly on certain drugs, thereby assuring higher, not lower prices.
Although somewhat confusing, an article in yesterday’s New York Times has details on the latest deal. And I’ve written before on how discounts are transformed into profits for Big Pharma–see the following posts:
Bottom line: cost control is sacrificed to market monopoly