Big Pharma balks at President's proposed budget

posted Wed, 15 Feb 2012

President Obama just released next year’s budget proposal and it has already sparked fierce criticism from the pharmaceutical industry. That’s because the plan would require Big Pharma to give an additional $156 billion in drug rebates over the next decade.

You may remember that the pharmaceutical industry already agreed to give $80 billion in discounts and rebates to help fund the administration’s health care overhaul. While it sounds like a huge amount of money, this was hardly a sacrifice for Pharma. Through its mandated coverage requirement, the bill would hand them 32 million new customers.

Obama's proposed rebates would benefit some of America’s neediest citizens. It would extend the savings that Medicaid recipients receive to dual eligibles—those with Medicare Part D who, because of low income, also qualify for Medicaid benefits. Currently Medicaid beneficiaries pay much less for their prescription drugs than those with Medicare Part D.

“Medicare Part D is working well for seniors,” says John Castellani, Pharmaceutical Research and Manufacturers of America (PhRMA) President and CEO, in response to the proposed budget. “Due to competition, costs continue to be far below initial projections. We should not disrupt this successful program.”

We beg to differ with Mr. Castellani, and so do our readers. We have heard from countless people who have Part D and are still struggling to bridge the coverage gap (donut hole) to afford the exorbitant cost of their needed medications. Here are a couple of real-life examples. Thank you to Jack and Gary for sharing.

 “To be honest, Medicare's drug benefit is nice but does not fill the bill. I end up in the donut hole the first month of every year! My meds cost me over $5,000.00 per year out of pocket. Yes, that is more than 15% of my income per year. I buy as many generic meds as possible. But the name brands are killers on my wallet.”

~ Jack Kelly

“I am a heart patient on disability. The price of brand name drugs like Plavix and Lipitor is shameful compared to pharmacies in Canada, and Canada has generic versions of these drugs much sooner than the U.S. The Medicare coverage gap makes these drugs completely unaffordable to most retirees. It's a travesty.”

~ Gary Levine

Two additional elements of the proposed budget would help to keep consumer drug costs in check. The first would reduce the number of years that drug makers have exclusive patents on biosimilar drugs, from 12 to 7.  The second bans “pay-for-delay” deals, in which brand name drug companies pay generic manufacturers to slow the introduction of cheaper drugs into the market. 

When running for office, Obama inspired us with his courageous promise to take on powerful pharmaceutical companies. But once elected, Obama seemed to kowtow to the industry. But this budget shows that he may once again be standing up to Big Pharma—and for Americans struggling to afford the high price of medication. It’s clear that the President will be up against formidable opposition. We hope that, for American consumers’ sake, he persists and finds both public and Congressional support.