Tuesday, February 14, 2012

"That's Some Box Of Chocolates!" -- Mr. Obama Just Took Pharma's $80 Billion "Voluntary" Offer. . . And Doubled It

Regular readers may well recall that, back in June of 2009, I said the $80 billion that multinational pharmaceutical manufacturers had agreed to kick in -- toward rebates for the health care reform package -- was a nice start, but only a start.

The President's new 2012 budget makes that clear.

While Mr. Obama may not ultimately get the entirety of his nearly doubled ($156 billion) pharma rebate amount in his budgetary request, from Congress, here -- it is likely that he will get a goodly chunk of it.

My best guess is that the number will end up around $130 billion, when all the shouting and moaning is over. In any event, here is Ed's fine take on it all, over at Pharmalot -- and just a bit of that (do go read it all!):

. . . .The response was swift. In a statement, PhRMA ceo John Castellini lambasted most everything and warned that the “proposed mandatory rebates in Medicare Part D are a short-sighted proposition that could destabilize the program and threaten hundreds of thousands of American jobs… This is not an investment in America’s future and these proposals should not be considered.”

Drugmakers are being asked to provide $156 billion in discounts over the next decade as part of a proposal to save $362 billion. Pharma, you may recall, agreed to provide $80 billion in discounts and rebates under the 2010 health-care law. And brand-name drugmakers currently provide rebates of up to 15 percent for Medicaid, but the White House wants to cover the so-called dual eligibles, or about 9 million seniors who qualify for both programs. . . .

Meanwhile, the White House noted that the FDA budget would total $4.49 billion for the year beginning October 1, which would amount to a 17 percent boost, reflecting increased user fees, in particular. These include a new user fee totaling $299 million to support generics and another $20 million for biosimilars. Over the past five years, about a third of FDA funding was generated by industry fees, but this would increase to 45 percent in the proposed budget. . . .

Do stay tuned, here -- as the proverbial fat lady isn't even clearing her throat, just yet. It is certain, though, that Merck will pay more than the perhaps $140 million a year I had earlier predicted, now. I'll update as developments warrant.


Anonymous said...

Not that I support President Obama but Mr. Catallini's comments are predictable and self-serving. He talks about this potential move leading to American layoffs as if it's not happening now or would not happen in the future if not for this give back. Spare me.

Most pharma has been serving one master - Wall Street - at the expense of patients for some time now. They should be relieved Obama didn't demand full scale price control that most other countries have in place.

Condor said...

I do hear you, Anon.

I do think it a cannard to blame health care reform for layoffs -- the same way Mitt Romney's attempt to blame the auto bailout on Obama, and then decry the "unfair treatment" handed to bankers in the auto situation -- is disinegenuous. Bush43 started the auto bailout, and the banks themselves were bailed out.

Finally, I don't thnk Mr. Obama wants price controls -- he's msarter than that. He knows they won't work.

Namaste -- and thanks!