About that deal with pharma

The NYT editorial board comes out against the White House deal with pharma.  As a refresher, pharma agreed to support reform if it got promises there would be no new negotiating with them for price reductions.  Oh, and they’d cut back prices $8 billion a year:

But the deal looks mostly good for the drug companies. They stand to gain tens of millions of newly insured customers who will be able to buy medicines. And the discounts the companies will provide to Medicare beneficiaries who reach a gap in their drug coverage, known as the doughnut hole, will apply only to brand-name drugs, helping the manufacturers to lock in customers that might otherwise turn to cheaper generics.

This deal is problematic for a number of reasons, some of which the NYT is finally realizing.  By preferentially lowering prices on some non-generics, pharma may actually come out ahead.  They do this all the time.  It’s why samples are always for more expensive brand-name drugs.

Now come the price increases. As Duff Wilson reported in The Times on Monday, the industry has raised the wholesale prices of prescription drugs by about 9 percent in the past year. That appears to be the highest annual increase since 1992.

There goes that $8 billion.

The industry contends that it must raise prices to finance research on new drugs, and that may hold some truth given the dearth of promising new drugs in the pipelines of major manufacturers. But the increases also look designed to establish a higher price base before reform bills, if passed, try to reduce drug spending.

Yes, it’s always for research and development?  Right?  No.  But here’s where the NYT argument gets lost:

The government needs every penny it can get to help cover the uninsured. Given the industry’s last-minute price increases, it seems prudent to ignore the supposed deal and demand a greater contribution.

We don’t just need that money because we need to cover the uninsured.  We need it because even the cost to the insured is too high.  I don’t know how many times I can say $2.5 trillion before people become numb.  Taking away our ability to negotiate lower costs in almost any sector of health care spending is foolish, and will prevent our solving the real probem.  We need to stop focusing only on the uninsured.

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