The White House's Bad Drug Deal

| Fri Aug. 7, 2009 1:52 PM EDT

Obama’s sellout on health care is hardly any secret, but this week's news of an outright backroom deal guaranteeing drug makers control over pricing is one for the history books. Even the Republicans didn’t lay down for big business quite like this.

As it now stands, there is no control over drug pricing in the US (save for a gesture in that direction under the Medicare Part D prescription drug insurance plan for the elderly). The system allows drug firms to set prices for prescription drugs under Medicare, in what amount to sweetheart deals with private insurance companies. 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 arrangement. It’s always been just another one of Washington’s dirty little secrets.
 

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Here is the way the Times reported it, along with 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 the drug company's $80 billion voluntary gift to the President to help achieve the appearance of bi-partisan health care reform, it’s all smoke and mirrors. No more than $20 billion will go to help Medicare recipients. The rest is to be doled out according to some unknown plan set forth by the drug makers. And 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 the more expensive brand-name versions, and thus will supposedly subsidize the elderly to buy those products. Put another way, a person covered under Medicare could save money under the existing plan if he/she buys generics. Under the Big Pharma plan, elderly people who choose the name-brand drug will get a subsidy to keep them from switching to generics that would save money across the entire system.

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