Big Pharma Offers President Obama Crumbs to Preserve Their Cake


The nation’s pharmaceutical companies have magnanimously offered to pony up what amounts to a filing fee on their license to print money.  They struck a deal with the White House and Congress to offer senior citizens discounts on prescription meds not covered by the Medicare D “donut hole.” Let’s see what’s really going in that hole:

The pharmaceutical industry agreed Saturday to spend $80 billion over the next decade improving drug benefits for seniors on Medicare and defraying the cost of President Barack Obama’s health care legislation, capping secretive negotiations involving key lawmakers and the White House.

“This new coverage means affordable prices on prescription drugs when Medicare benefits don’t cover the cost of prescriptions,” Sen. Max Baucus, chairman of the Senate Finance Committee, said in a statement announcing the accord.

Land’s sakes,I do believe I’m feeling faint!  $80 billion?  Where are they going to get a pile of cash like that?  Well, it’s not exactly a pile of cash:

Baucus’ announcement said drug companies would pay half of the cost of brand-name drugs for seniors in the so-called doughnut hole — a gap in coverage that is a feature of many of the plans providing prescription coverage under Medicare.

So, they’re not actually ponying up anything but a pile of BOGO coupons, and even then, it’s only for the “donut hole.”  Everything before and after that $3454.00 gap is paid for at full price by the patient and the American taxpayer.

Still, half off isn’t nothing, right?  Well, consider this.  Medicare can’t negotiate with pharmaceutical companies on price, despite being their largest bulk customer.

Now, I know what you’re thinking.  This isn’t like getting a couple of bucks off on your Hot Pockets at Sam’s Club.  Negotiated discounts by private insurance companies average about 40%.  Medicare’s discounts from physicians and hospitals are even steeper.

Big Pharma is essentially giving up a 10% discount, in the donut hole only, in order to reap their 100% windfall when the taxpayer is on the hook.

Oh, and that $8 billion a year in “discounts?”  Weigh that against the more than $4 billion they spend each year on those direct-to-consumer ads telling you to “ask your doctor” about things your doctor would already have told you about if you needed them.

I don’t usually go in for tin-foil-y arguments about political funding, because the numbers are so easily manipulated, but this deal is so bad, I’m listening where Baucus is concerned.

Candidate Obama said he would push for negotiated discounts for Medicare.  If nobody asks first, my next question for Robert Gibbs will be whether the pricetag for Big Pharma’s generosity includes killing the law that’s in committee now to allow negotiations on price.  Then, we’ll know what’s going in (and out of) that “donut hole.”

Update: I have requested comment from the White House and from Senator Baucus, and am awaiting a response.



  1. Shaking head,

    something tells me, this just isn’t gonna do squat for us in the long run….

    too many cooks in the kitchen.

  2. Oh, for–!

    There are many reasons I hate the pharmaceutical industry. The fact that we occasionally have to sink $15 per pill for a relatively common medication is one of them.

    Also – clever pun in the header there. “Pill-age”. Heh.

  3. […] A universal coverage mandate, without a public option (which America wants), is just a big giveaway to insurance companies, much like the, at best, worthless deal with Big Pharma. […]

  4. […] June, I wrote a story that raised big questions about the value of the government’s $80 billion deal with Big Pharma, and wondered if the deal came with the trade-off of killing legislation that would enable the […]

  5. […] closed doors making deals with Big Pharma… Riehl World View: Oba-Ba-Ba-Budget Buster Daily Dose: Big Pharma Offers President Obama Crumbs to Preserve Their Cake 08/18/09 – National Data: Legal Immigration-The Bigger Obamacare […]

Comments RSS TrackBack Identifier URI

Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s