Tag Archives: PhRMA

Big Pharma’s Skyrocketing Prices

The AP reported yesterday on a new Government Accountability Office (GAO) report on soaring drug prices:

Prices on a growing number of prescription medications have ballooned in recent years as consolidation in the drug industry leaves fewer companies manufacturing niche medications.

Congressional investigators say the number of extraordinary price hikes on drugs doubled between 2000 and 2008. The drugs affected are mostly specialty medications but also include some popular products like Bayer’s antibiotic Cipro and the Eli Lilly schizophrenia treatment Zyprexa.

The Government Accountability Office report issued Monday attributed the rise to a combination of factors, including industry consolidation and price hikes by third-party providers who repackage drugs for patients.

The GAO’s findings could put new pressure on drugmakers to contribute billions more to the health care reform effort being finalized by Congressional Democrats.

The drug industry originally pledged $80 billion to defray the costs of covering millions more Americans, but the package being negotiated between the House and Senate is expected to call for well over $100 billion in financing from drug companies.

GAO found more than 400 examples of unusual price jumps on brand name drugs during the eight-year period — most ranged from 100 to 499 percent, but several exceeded 1,000 percent.

Unsurprisingly, the drug industry lobby Pharmaceutical Research and Manufacturers of America (PhRMA) “says the requested investigation is based on misleading data.”

What I’m waiting to see is whether these findings actually do inspire the Democrats to “put new pressure on drugmakers to contribute billions more to health care.” As I’ve written before, Big Pharma’s $80 billion “gift” to health care reform is a Trojan horse. And measures that might actually cut into their still-wide profit margin–like government price controls–are weak in the House’s bill, and absent altogether from the Senate’s.

Big Pharma Is the Big Winner in Health Care Reform

 Big Pharma was the real winner in last week’s shouting match between Obama and the insurance industry. Insurance execs took all the heat for attacking the White House’s health care reform plan after the administration and lawmakers had negotiated for months to craft a proposal that the industry could live with. Meanwhile, Pharmaceutical Research and Manufacturers of America (PhRMA), the main industry umbrella group, got to play the good guy—all the while escaping scrutiny for the fact that in recent months it has been quietly jacking up drug prices. 

Of course, Big Pharma already stands to hit the jackpot from Obama’s proposed reform plan. Under the deft direction of its chief lobbyist, former Louisiana congressman Billy Tauzin, PhRMA had already secured a valuable deal from the White House to provide a $80 billion in cost savings over the next 10 years in return for the President’s promise to oppose controls on drug pricing and importation of drugs from abroad.

As Fox’s Brian Sullivan points out, health care reform will increase the market for pharmaceuticals by tens of millions of people—a stock market bonanza:

The top 10 prescription drugs in America do around $40 billion per year in sales. It is estimated that 30 to 40 million Americans… lack insurance, or about 20 percent of the population. These 30 to 40 million new ‘customers’ will have greater access to doctors and prescriptions. …this could add another 20 percent to sales of just the top 10 drugs alone. Twenty percent of $40 billion is—bingo—$8 billion per year. And remember that only factors in the top 10 drugs. There are hundreds more in the market. It is clear that $8 billion in cost cuts will be made up in multiples over the years.

But just in case someone throws a wrench into the deal, Big Pharma has been hedging its bets by quietly running up drug prices this year. The Pharmalot blog reports:

During this year’s third quarter, eight of the biggest drug makers introduced hefty price increases of an average 8.7 percent—easily outdistancing the core Consumer Price Index of 1.4 percent, according to a recent research report by Credit Suisse analyst Catherine Arnold.

Who led the pack? Schering-Plough (soon to be bought by Merck) with a 12.8 percent hike, while Abbott imposed a 4.4 increase (Abbott’s price hikes have, in fact, been declining over the past year, the report notes). What about the others? Merck upped the ante by 9.9 percent; Wyeth (soon to be part of Pfizer) drove prices higher by 9.3 percent; Lilly was at 9.1 percent; Bristol-Myers Squibb prices rose 8.9 percent; Johnson & Johnson increased prices by 7.8 percent, and Pfizer prices rose 7 percent.

Of course, the White House could back out of its arrangement. But as the Senate Finance Committee moved the legislation last week, the deal seemed to be holding together just fine. Newsweek’s Howard Fineman explains how two attempts to ramp up funds from the drug industry were beaten—not by Republicans, but by Democrats:

The Senate Finance Committee’s bill, which passed out of committee on Tuesday, leans very hard on Medicare—but treads very lightly on the private sector. Sen. Bill Nelson, a Democrat from senior-dominated Florida, apparently had not gotten the memo about leaving Big Pharma alone. He wanted to offer two amendments, each of which would have taken another $100-billion-plus bite out of the industry’s Medicare revenue. Tauzin was not pleased. Neither was the White House. The senator was talked out of offering one amendment. He narrowly lost on the other after [Jim] Messina, the White House aide, called to express his dismay and to remind everyone that a deal was a deal. Democrats celebrated the outcome as a victory. The only losers were the American people. But, hey, they weren’t at the table.

More on Congress’s Addiction to the Drug Lobby

The Washington Post this morning prints an lengthy article and elaborate chart showing the numbers of drug lobbyists at work on the health reform legislation. This list includes a little congress in itself of former aides and members that only lots and lots of money could buy.

The nation’s largest insurers, hospitals and medical groups have hired more than 350 former government staff members and retired members of Congress in hopes of influencing their old bosses and colleagues, according to an analysis of lobbying disclosures and other records.

The tactic is so widespread that three of every four major health-care firms have at least one former insider on their lobbying payrolls, according to The Washington Post’s analysis. Nearly half of the insiders previously worked for the key committees and lawmakers….

The hirings are part of a record-breaking influence campaign by the health-care industry, which is spending more than $1.4 million a day on lobbying in the current fight, according to disclosure records. And even in a city where lobbying is a part of life, the scale of the effort has drawn attention. For example, the Pharmaceutical Research and Manufacturers of America (PhRMA) doubled its spending to nearly $7 million in the first quarter of 2009, followed by Pfizer, with more than $6 million.

Valuable as this information is, you have to wonder whether the paper would have published any of this without Politico’s expose of publisher Katherine Weymouth‘s audacious plan to hold a salon where, in exchange for fees running as high as $250,000, from the lobbyists, she would bring the paper’s reporters, key administration sources, and other notables to her home for a private confab on health care—like a little closed committee session, if you will, where the Post could facilitate Obama’s reform on industry’s terms. Once the plan was made public Weymouth cancelled the salon and apologized.