Drugmakers' Support for Health Overhaul Tested
From Associated Press (December 7, 2009)
WASHINGTON_The pharmaceutical industry may have to cough up more
than the $80 billion it agreed to contribute to President Barack
Obama's health overhaul effort, reflecting pressure from Democrats
and their supporters for more money to cover older and low-income
people.
Obama and congressional Democrats want the drug industry to remain
a crucial ally in the health care fight because of its deep pockets
and influence in states where it is a large employer, including New
York, New Jersey, Connecticut and Indiana. So far, it remains an
active backer of the Democrats' efforts to expand a supportive TV
ad campaign on which it has already spent tens of millions of
dollars.
By many accounts, the health package the House approved last month
would count on getting about $140 billion from drug companies to
defray additional health care costs over the next decade. Industry
officials say the version the Senate is debating may already pluck
close to $100 billion from drugmakers _ and an expected parade of
amendments could boost that by billions more.
"The numbers are still in the same ballpark," said Ken Johnson,
senior vice president of the Pharmaceutical Research and
Manufacturers of America. "And we're still committed to making
health care reform a reality this year."
The proposals to dig deeper into drugmakers' wallets pose a test
for one of Washington's richest lobbies as it works to limit the
damage. Many Democrats believe the industry will profit when
roughly 30 million uninsured Americans gain coverage for
prescriptions.
"There's enormous pressure on the part of Democrats to spend more
money. Who's got deep pockets?" said Robert Laszewski, a health
care consultant. "The drug companies are going to have to pay
more."
About $320 billion in pharmaceuticals will be sold in the U.S. next
year, according to IMS Health Inc., a data tracking firm. But that
is expected to grow by less than 5 percent annually in the next few
years, a relatively low figure caused by a paucity of new drugs and
growing numbers of low-cost generic competitors, IMS said.
Other groups backing the health overhaul also are facing problems
as Congress shapes the legislation. Hospitals oppose an amendment
penalizing those facilities with high infection rates, and groups
representing the elderly are wary of a Medicare cost-saving
commission that, they worry, would cut the program too
deeply.
So, pressures to write legislation at the cost of the drug
manufacturers is widespread.
The powerful AARP, representing older Americans, wants to close the
"doughnut hole," a gap in Medicare's coverage of prescription
drugs. Consumer groups want higher federal subsidies so low-income
people can afford health insurance.
Senators want to require bigger drug discounts for many low-income
seniors, to allow importation of lower-priced drugs and to shorten
the period of patent protection for brand-name biological drugs
opening the way for less expensive generic competitors. There is a
push to cover the uninsured sooner than three or more years from
now, a delay lawmakers built into the bills to reduce the
cost.
The House bill has a 10-year overall price tag of $1.2 trillion
while the Senate's costs nearly $1 trillion.
Those targeting drugmakers point to a recent AARP report saying
prices on popular brand name drugs rose by 9 percent over the past
year, when overall inflation fell. They also cite recent Fortune
magazine rankings showing that pharmaceutical companies' profits
grew by 25 percent last year, fifth highest among 51
industries.
Drugmakers dispute that.
Johnson says the AARP study overstated drug prices by ignoring
discounts manufacturers often provide. He says the industry has
shed thousands of jobs this year and saw lagging stock prices, and
says its profits from an overhaul would be limited because many new
customers would buy generic drugs or get discounts.
To argue their case, drugmakers have spent $137 million lobbying
this year, more than any other industry, the nonpartisan Center for
Responsive Politics says. In July through September, the
drugmakers' trade group alone reported spending nearly $7 million
lobbying. It directly employed 19 lobbyists working on health care
overhaul and hired 24 outside firms with 73 lobbyists for the
issue.
The pharmaceutical industry agreed to provide $80 billion in drug
subsidies and fees in a June deal with Senate Finance Committee
Chairman Max Baucus, D-Mont., and the White House. Baucus aides
said the bill his panel approved in October honored that
figure.
The version the Senate is debating, written by Senate Majority
Leader Harry Reid, D-Nev., might already be higher, although its
final cost to the drug industry remains unclear.
But the House bill would cost drugmakers about $140 billion,
according to Rep. Frank Pallone, D-N.J., chairman of the health
subcommittee. That suggests an eventual House-Senate compromise is
likely to exceed $80 billion.
"They didn't reach that agreement with us," said Rep. Henry Waxman,
D-Calif., chief author of the House-passed bill, of the $80 billion
figure. "We need all the money we can get to hold down costs."
Posted: December 2009
