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Big Pharma’s Interactions With Obamacare

Stanley Feld M.D.,FACP,MACE

President Obama strategy is to provide favors to potential enemies and then throw them under the bus when he has gotten what he needed from them.

He managed to seduce the American Medical Association, the American Hospital Association and the American Pharmaceutical Association (Big Pharma) to support Obamacare as it was being passed.

Recently he has thrown the American Pharmaceutical Association under the bus.

President Obama needed Big Pharma’s support in order to decrease the resistance to the passage of Obamacare in 2009.  In order to get Big Pharma’s support President Obama made many promises to Big Pharma and satisfied Big Pharma’s vested interests.

These promises included political protection against the left wing wish list to control drug prices. The wish list included weakening drug patents, decreasing intellectual property shelters for new drugs from 12 years to seven years and decrease payment rates for medications administered in the hospital (namely cancer drug therapies). 

Additionally, the White House agreed to spare the drug companies from central planning such as allowing the Health and Human Services Department to “negotiate” lower drug prices.

President Obama succeeded in getting Big Pharma to contribute $80 billion dollars via drug discounts that would affect Obamacare’s bottom line. Big Pharma did that largely by increasing the Medicaid’s drug discount from 15.1% to 23.1%.

Big Pharma also agreed to mark down prescriptions for seniors by 50% above a certain drug cost.

It might appear that President Obama got the better of the deal to obtain Big Pharma’s support for Obamacare.  

This was definitely not true. Big Pharma is making a killing from the government and from out of pocket payment from consumers.

A small part of the killing is explained in Dr. Dale Fuller’s article (that appear in the blog) about Oncology drugs "Is Pharmaceutical Pricing Weird, Or What?"

“Remember the business line, circa 2009, that if you weren’t at the Obamacare table you were on the menu (to be eaten)? Well, Big Pharma sat at the table, gave Mr. Obama what he wanted, and is now back on the menu as the cheese course. “

I believe President Obama’s agenda was to take all the favors away after Obamacare was passed and became law.  He tried to take Big Pharma’s favors away in the 2015 budget. He did not succeed.

He slowly worked to get most brand name drugs covered by eliminating the price fixing reprieve. Medicare Part D pays nothing or little for Brand Drugs. 

“ 2009 was then. The budget directors now claims to be “deeply concerned with the rapidly growing prices of specialty and brand name drugs” and, sure enough, it rescinds the price-fixing reprieve.”

President Obama is becoming more aggressive. He is using the mainstream media to create a furor over the price of specialty drugs. A well-publicized example is the price of the drug that cures hepatitis-C. The government will negotiate a lower price.

Drug prices had been escalating long before Obamacare. Obamacare simply let the genie out of the bottle with its favors to Big Pharma.

Big Pharma overplayed its favors and took advantage of the price reprieve inviting Big Government to step in.

I predict we are going to see all of the favors given to Big Pharma  rescinded before President Obama’s time in office is over.

The federal government will launch a price fixing offensive and choke Big Pharma’s profit making machinery completely.

This is the era of generic drugs. Big Pharma gave this away to the federal government to retain control of the new drug profit margin.  

Since government doesn’t pay for new drugs it can brag, 

“Taxpayer costs were $353 billion or 36% less than the Congressional Budget Office’s original projections for 2006-2013.”

"President Obama’s order to rescind his deal with Big Pharma will result in unintended consequences. Big Pharma will have not the incentive to develop new drugs.

President Obama’s with Big Pharmadeal should have never been  made in the first place.

Handing the $1.093 trillion HHS bureaucracy Soviet-style price fixing powers will undermine the pharmaceutical innovation that depends on large returns on the few medicines that succeed. Even the threat of price fixing could distort investment decisions

President Obama double-crossed Big Pharma.

“ In this double cross lies a warning for the next CEOs and lobbyists who are deluded enough to trust Washington liberals.   Everyone will get devoured eventually.”

“It’s tempting to say the drug makers deserve their fate, except that the ultimate costs of their folly will be born by Americans who won’t enjoy the longer lives, fewer hospitalizations and less suffering that new therapies can bring.”

 It is clear to me that a centrally controlled market rather than a free market leads to a distorted marketplace that is not self-correcting. Consumers, and not the government, must be in control of the healthcare system.

The government should protect consumers from being abused by other stakeholders in the system.

Government should not make under the table deals that hurt consumers.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

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