Wednesday, December 16, 2009

President Obama, (Selectively) Loyal

They say patience is a virtue. So is loyalty.

On July 7, representatives of several pharmaceutical companies met at the White House with representatives of the Administration and carved out a then-secret deal. In return for its support of President Obama's health care efforts, the Pharmaceutical Research and Manufacturers of America received several concessions from the White House. The deal, as outlined in a memorandum obtained the following month by The Huffington Post and reported by Ryan Grim, comprised a

Commitment of up to $80 billion, but not more than $80 billion.
1. Agree to increase of Medicaid rebate from 15.1 - 23.1% ($34 billion)

2. Agree to get FOBs done (but no agreement on details -- express disagreement on data exclusivity which both sides say does not affect the score of the legislation.) ($9 billion)

3. Sell drugs to patients in the donut hole at 50% discount ($25 billion)
This totals $68 billion

4. Companies will be assessed a tax or fee that will score at $12 billion. There was no agreement as to how or on what this tax/fee will be based.

Total: $80 billion

In exchange for these items, the White House agreed to:

1. Oppose importation

2. Oppose rebates in Medicare Part D

3. Oppose repeal of non-interference

4. Oppose opening Medicare Part B


The deal did not bind the United States Congress. But 0n Tuesday, 30.5 (Lieberman included) Democrats joined 17 Republicans and the White House in killing a major effort by Senator Byron Dorgan (D.-ND) to lower drug prices for millions of Americans.

The amendment would have allowed pharmacies and wholesalers to import U.S.-approved medication from Canada, Europe, Australia, New Zealand and Japan and faced major opposition from Senators Thomas Carper (D.- AstraZeneca), Robert Menendez (D.- Merck), and Frank Lautenberg (D.- Sanofi-Aventis).

Sure, as the Democratic nominee for President, Mr. Obama had other ideas, as he made clear when in October 2008 he declared (video below- starts at approximately 23:00)

First, we'll take on the drug and insurance companies and hold them accountable for the prices they charge and the harm they cause... And then we'll tell the pharmaceutical companies, 'Thanks but no thanks for overpriced drugs'. Drugs that cost twice as much here as they do in Europe and Canada and Mexico. We'll let Medicare negotiate for lower prices. We'll stop drug companies from blocking generic drugs that are just as effective and far less expensive. We'll allow the safe reimportation of low-cost drugs from countries like Canada."

The Pharmaceutical Market Access and Drug Safety Act would have saved the federal government $19,4 billion over ten years and American consumers $20 billion over the same period. It had 20 co-sponsors, including four Republicans, demonstrating the bipartisanship so treasured by Barack Obama during the campaign and when it undermines the progressive nature of legislation such as the stimulus and health care reform. And the bill was co-sponsored by Mr. Obama when he was in the Senate.

But a deal is a deal. So when Margaret A. Hamburg, the President's commissioner at the FDA, sent the upper chamber a letter Tuesday morning raising the specter of tainted drugs entering the U.S. from abroad, she was serving the President well. Though it may have been unnecessary, given the wide range of recipients of campaign funds from the pharmaceutical industry, the scare tactic could only help the industry's interests.

It didn't matter, as Roger Hickey, Jeff Cruz, and Dean Baker found in April 2007 "the U.S. consumers pays 52% more than British, 67% more than Canadian, and 92% more than French consumers for a market basket of 30 drugs.[3]"

Nor was it consequential

that many good ol’ American drugs sold at good ol’ American pharmacies are manufactured in China. We live in a largely deregulated global economy today — and this is the case whether you order your medications from U.S. or Canadian pharmacies. In most if not all cases, the drugs you receive from a properly licensed Canadian pharmacy are identical to those you would receive from a U.S. pharmacy.

The deal with Big Pharma- which would have been blown up by adoption of Dorgan's amendment- commits the White House to "oppose repeal of non-interference." As Grim noted, "'Non-interference' is the industry term for the status quo, in which government-driven price negotiations are barred. In other words, the government is "interfering" in the market if it negotiates lower prices." Hickey, Cruz, and Baker had estimated "Repealing this provision (i.e., non-interference) and allowing the government to negotiate for cheaper prices could save U.S. taxpayers and seniors more then $30 billion a year."

Nor does it matter that the drug companies have rewarded President Obama's generosity in an odd fashion, according to a New York Times article of last month:

In the last year, the industry has raised the wholesale prices of brand-name prescription drugs by about 9 percent, according to industry analysts. That will add more than $10 billion to the nation’s drug bill, which is on track to exceed $300 billion this year. By at least one analysis, it is the highest annual rate of inflation for drug prices since 1992.

The drug trend is distinctly at odds with the direction of the Consumer Price Index, which has fallen by 1.3 percent in the last year.


But a deal is a deal. It may damage the budget, impoverish millions of Americans, and mark the President as a sucker by the pharmaceutical industry. But ever virtuous, Mr. Obama is loyal, at least to powerful corporate interests.



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