Tuesday, August 25, 2009


The Waxman Cometh

The New York Times reports today on Henry Waxman's plan to challenge the apparent "deal" between pharma and the administration in which pharma would give up $80 B in exchange for DTC'ing in favor of healthcare reform, not having to negotiate Medicare pricing further, and supporting some version of reform in general.

The article includes an interesting array of responses from pols, analysts, conservative think tankers, industry folks, et. al. As already noted here, Billy Tauzin says a Waxman-like move would be a "deal breaker." I have personally speculated that such a result would not be entirely unwelcome by the industry at this juncture.



  1. The reality is that if we are to deal with the Alzheimer's epidemic, the diabetes epidemic, AIDS, and some diseases we don't even know about today, we will need pharmaceuticals to do it. It's that simple. The dollars to develop those drugs come from profits in the here and now. If the Congress wants to cut back on how much the industry spends (or overspends) on marketing, then it should make such marketing expenses non-deductable as business expenses. It's really simple. Otherwise, there's a good portion of that $80 billion which won't go to fund needed medical research. I guess going to a bunch of Wall Street fat cats or into Iraq or sustaining a US auto industry which isn't otherwise sustainable is a better use of this money. When you look around in 10-20 years and wonder why we've made no progress against Alzheimer's or Parkinson's or ALS or diabetes, think back to this agreement.

    There's another thing that needs to be done, though, and that's to get rid of the heads of R&D at just about all the big pharma companies. They are so risk averse you'd think they all came out of Roche. We need some good decision makers, not folks counting the days til their options vest.

    Bottom line: we need the pharmaceutical industry to function. If it doesn't, health care goes up much more in the future than it otherwise would. Taking an $80 billion whack out of the industry doesn't help it function.

  2. Thanks for the comment, Anon. So you are against the apparent "deal" that Billy Tauzin has talked about and PhRMA has apparently agreed with?

    You probably saw the recent study that showed that, as measured against R&D dollars spent, fewer new drugs are developed in the U.S. than in Europe or Japan. Of course, all the large companies are international in any case.

    Beyond that, I think the cost/profits issue is complex. The core of the current debate is whether Medicare part D ought to allow negotiated pricing in the same way that the state Medicaid plans it replaced did. Certainly, that does not seem to have impacted R&D.

  3. A sweet deal was cut for pharma. After Part D was implemented, they no longer had to put up with Medicaid administrators who, before Part D, had the legal right to parley for price cuts. Since then, pharma has raised drug prices for the poor, costing taxpayers billions.

    Shame on Congress for passing a bill they don’t like. And, as usual, the taxpayer is stuck paying the bill. That is no defense for pharma, but there is no defense for Congress.

    “Unlike existing government health plans, Part D does not allow the administration to negotiate drug prices with pharmaceutical companies. As a result, these companies are charging taxpayers up to 80 percent more for drugs purchased under Part D than for those purchased under other plans.” See: http://content.nejm.org/cgi/content/full/354/22/2314NEJM -- Medicare Part D -- The Product of a Broken Process

  4. thanks for the reference, Observer.


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