The Pink Sheet
“Can Pharma Industry Afford To Give Up More For Health Reform? PhRMA Says President “Misinformed””
July 30, 2009
President Obama is “misinformed” in his opinion that the pharmaceutical industry can afford to make more drug price sacrifices as part of health care reform, the Pharmaceutical Research and Manufacturers of American said.
In an interview, PhRMA Senior VP Ken Johnson responded to a question about Obama’s assertion, made most recently during a July 28 town hall meeting sponsored by AARP, that “we can get potentially an even better deal than” the $80 billion in drug price discounts the industry previously agreed to with the Senate Finance Committee and the White House.
“Unfortunately, the president is misinformed,” Johnson said. “The simple fact is our companies are making a significant financial contribution to health care reform that comes with some consequences. This is $80 billion coming off our companies’ books, and there’s going to be some accompanying pain. This is going to require our companies to make some difficult decisions in moving forward, but at the same time if health care reform is passed and the agreement remains in place, it provides our companies with some certainty to make the kind of long-term R&D decisions that are important to our companies.”
Regarding Obama’s claim at the AARP event that American’s pay 77 percent more for drugs than people in other countries, Johnson said “it’s not a figure we’ve heard before,” although he noted it is generally recognized that drug prices in other countries are often lower because they have price controls.
It is also unfair to assume that pharmaceutical companies will reap a windfall in profits through an expansion of health care coverage, Johnson said.
He said that about 60 percent of the currently uninsured are 35 years old or younger, a population that does not take a lot of prescriptions, that the majority of the newly covered are likely to get generic drugs and that patients who paid full retail price when they were uninsured will get drugs at prices set by Medicaid or negotiated by private insurers once they are insured.
“Our best estimate of the net impact on industry revenues [from coverage expansion] is pretty modest, ranging from a potential upside of about 1% to a loss of about 2% depending on who you talk to,” Johnson said, “but there are absolutely no facts out there to support the notion that this agreement will lead to a windfall for the industry. That’s simply not true.
Still, Johnson said PhRMA believes the $80 billion agreement “is the right thing to do if it ensures that every American has access to high quality affordable health care coverage and services. It’s part of the shared sacrifice that we believe is necessary.”
PhRMA will be running ads in support of passing comprehensive health reform over the August recess in states where its members “have a significant economic footprint,” such as California, Illinois, Indiana, New Jersey and North Carolina, Johnson said.
The Energy and Commerce Committee resumed markup of the House reform bill July 29 after postponing the proceedings for over a week to resolve disagreements with fiscally conservative Blue Dog Democrats on the committee.
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