No One Could Have Predicted…

No one could have predicted that a behind-closed-doors deal between the White House, Max Baucus, and the pharmaceutical industry to voluntarily cut their costs would not be honored by Big Pharma.

But the drug makers have been proudly citing the agreement they reached with the White House and the Senate Finance Committee chairman to trim $8 billion a year — $80 billion over 10 years — from the nation’s drug bill by giving rebates to older Americans and the government. That provision is likely to be part of the legislation that will reach the Senate floor in coming weeks.

But this year’s price increases would effectively cancel out the savings from at least the first year of the Senate Finance agreement. And some critics say the surge in drug prices could change the dynamics of the entire 10-year deal.

I expect we’ll see strong defenses from both Baucus and the White House of the pharmaceutical industry, accompanied by continued efforts to legislate any required cost schedules for brand-name prescription drugs. We will continue to be asked to trust Big Pharma and not cut into their bottom line by bulk negotiating drug prices, importing from Canada, or reducing the patent lifetimes that keep generics off the market.

The reason we’ll still see the White House and Baucus stand by Pharma is that they are both afraid of the pharmaceutical industry spending hundreds of millions of dollars in television advertising attacking reform. Now, the slight voluntary cost cuts in exchange for no negative ads will be traded in for maintaining the status quo in exchanged for no negative ads.

Cynics, myself included, have long expected that health care reform would be reform in name only. I never really expected that it would so literally be reform in name only, as we’re now seeing from the White House’s deal with Big Pharma resulting in literally no change in costs to consumers. Hopefully today’s news will show Baucus, the White House, and other Democrats on the Hill that non-binding verbal agreements are simply not going to be honored by the pharmaceutical industry. The only answer is to legislate reform. If the administration and leading Democrats on the Hill can’t see that, they will hopefully at least be clear-eyed about the electoral consequences for fake reform.

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