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Big Pharma to Cut Drug Costs - Whoopee

Posted Jun 25 2009 12:16pm

As is true of TGB commenters a couple of days ago, Crabby Old Lady is having trouble tracking all the threads of the Washington health care debate. Since she read, on Tuesday, about what the White House overstated as an “historic agreement to lower drug costs" – only two days ago – the conversation has already moved on. Crabby, however, hopelessly behind, is still on the drug story.

The essence of the agreement is this: pharmaceutical companies have agreed to cut drug costs by $80 billion over ten years, $30 billion of which will go to helping Medicare recipients through the doughnut hole in the prescription drug coverage (Part D). According to the White House website:

“As part of the upcoming health care reform legislation, drug manufacturers that participate in Medicare Part D will either pay a rebate to Medicare or offer a substantial discount of at least 50 percent on prescription drugs to seniors who fall within the infamous "doughnut hole" — payments between $2700 and $6153.75 not covered by Medicare.”

Additionally, 100 percent of the full cost of the drugs will count toward reaching the $6153.75 doughnut hole limit thereby reducing the time before full coverage resumes, thereafter paying 95 percent of drug costs.

Beyond that, there are few details and some questions. How many elders who fall into the doughnut hole will the annual $3 billion cover? What happens when the $3 billion is spent; who gets left out? How will the $50 billion additional monies be spent? There is only speculation and as Consumer Union policy analyst, Steven D. Finley, notes:

“...this still leaves the doughnut hole in place and hundreds of thousands, perhaps millions, of seniors on the hook for drug costs they cannot afford.”
The New York Times, 23 June 2009

So, begging the pardon of the president, Congress, AARP and virtually every news outlet, who are singing the Hallelujah Chorus for this munificence on the part of big pharma, Crabby Old Lady is not impressed.

There is still the doughnut hole which should never have been created; no one is discussing allowing Medicare to negotiate drug prices as the Veterans Administration does; and we pay nearly twice as much for prescription drugs overall as people in such countries as Canada and Germany. In fact, prescription drug prices in the U.S. are the highest in the world.

Drug manufacturers have scored handsome, increased profits from Part D in the three years since it went into effect, and they are poised for billions more if a health care reform bill provides tens of millions of uninsured Americans with coverage.

So $80 billion in concessions from the pharmaceutical giants would appear to be pocket change - not quite 2.5 percent of the $3.3 trillion the Department of Health and Human Services estimates will be spent on prescription drugs over the next ten years.

Although some elders will get some relief from the high drug costs imposed by the doughnut hole - and this is a good thing - Crabby Old Lady sees nothing historic about the new agreement.

In a rational government that placed the good of the people before exorbitant corporate profits, all this would be moot. Our legislators would be writing a bill that would expand Medicare to everyone or creating a single-payer system into which Medicare could be folded – either one including an intelligent drug policy.

Instead, the Democrats are tinkering with minutiae and the Republicans are screeching Socialism. Bah, humbug.

UPDATE JUST BEFORE POSTING THIS STORY: The New York Times editorial board this morning seems to have been reading over Crabby Old Lady's shoulder on this issue. Good for them.

At The Elder Storytelling Place today, Johna Ferguson: Summer 1942.

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