Big Drug Profits In Medicare – A Republican Gift To Big Pharma

I spend a decent amount of time each week negotiating with insurance companies in an effort to settle claims on behalf of my clients. I have been doing this for over 35 years in Florida where, generally speaking, negotiations are viewed as a productive practice when there is a need to arrive at a fair compromise.

I thought negotiations with drug manufacturers would have been a productive process in the new Medicare drug program to hold costs down. The Republicans in Congress, apparently, concluded it would be better to ban negotiations with Big Pharma. I was puzzled by this action – it seemed designed to assure greater profits for drug companies and not to benefit Medicare recipients.

Managed Care Matters is even more puzzled after reading two articles in the New York Times.

Drug-induced dissonance

I’m suffering from a severe case of cognitive dissonance, brought on by completely conflicting statements in articles from a single source, the New York Times. In Friday’s business section, Alex Berenson notes that big pharma, led by Pfizer, Lilly, Novartis and Wyeth all enjoyed strong profit gains in the third quarter.

The profits were generated, in large part, by price increases in the US, where Lilly’s prices were up 11%, contributing to a 14% gain in US revenues. Fair enough, prices went up, so did profits.

In the next (virtual) breath, another NYT article quotes the Congressional Budget Office’s as concluding that a Democratic Congress’ efforts to reduce Medicare drug spending by negotiating directly with pharmaceutical manufacturers will not work because private industry is so darn good at negotiating prices. (polemics are mine, but you get the point)

So let’s see. Drug manufacturers are making nice profits by increasing prices in the US. Prices are not going up overseas, where every other country negotiates prices en bloc. And yet the US, the single largest market for drugs, could not impact drug prices by negotiation?

If this gives you a headache, there is a cure early in November on election day.