The pharmaceutical industry, through its lobbying group PhRMA, has promised to cut drug prices for certain Medicare Part D recipients and others by $80 billion over the next decade. In return, the Obama Administration has promised not to reform the pharmaceutical industry — no new regulations, no Medicare negotiation for lower drug prices, no drug reimportation from Canada.
Sound like a good deal to you?
Well, $80 billion sure sounds like a lot of money. But here are some things to think about —
- President Obama trumpeted the deal without indicating how or whether these savings could be guaranteed; the specific terms are not included in any of the bills in Congress.
- Some analysts estimate that only $30 billion of the $80 billion can be guaranteed.
- Since U.S. prescription drug prices have been rising at three times the rate of inflation, it is unclear whether the promised price cuts will actually reduce prices or simply slow their growth temporarily.
- In accepting PhRMA’s demand for no price negotiations, the government is forgoing what could be as much as $220 billion in savings over the same period, according to a report by the Institute for America’s Future, which matched drug price savings the government negotiated for the Veteran’s Administration.
- Americans spend $200 billion per year on prescription drugs — and rising (even with the $80 billion “discount”).
- We pay more for prescription drugs than any country in the world. The Congressional Budget Office found that drug prices in other countries average 35 to 55 percent below the prices in the U.S. But now that Obama has buckled on Canadian drug reimportation, Americans cannot take advantage of these bargains (at least according to the letter of the law).
- The pharmaceutical industry spends $100 million a year — $1 billion a decade — just on lobbying members of Congress.
- Even in the midst of a recession, Johnson & Johnson CEO William Weldon was paid $29,127,432 in 2008; Abbott Labs CEO Miles White made $28,253,387 and Merck’s Richard Clark made $25,073,555.
- Overall, Americans pay twice as much (or more) per capita on healthcare than all other Western countries, which in many cases have better health outcomes than the United States.
How’s that $80 billion sound now?