Personal About Politics: Drug Makers Raise Prices at Record Rate

Among the first to be invited to the table to talk to President Obama about health care reform were the drug makers. Much to the chagrin of Democrats on the Hill, the White House made a backroom deal with the pharmaceutical industry, shaving $8 billion off the nation’s drug costs, but limiting the flexibility of lawmakers to wring savings from the drug companies. (Time)

If President Obama thought by inviting the drug makers into the negotiations they could be kept in check, he was wrong. Ever since the secret deal, pharmaceutical companies have been increasing their prices at a record pace.

In the last year, the industry has raised the wholesale prices of brand-name prescription drugs by about 9 percent, according to industry analysts. That will add more than $10 billion to the nation’s drug bill, which is on track to exceed $300 billion this year. By at least one analysis, it is the highest annual rate of inflation for drug prices since 1992. (NY Times)

AARP’s Public Policy Institute finds that average manufacturer price increases for brand name and specialty prescription drugs widely used by Medicare beneficiaries continued to far outstrip the price increases for other consumer goods and services in the 12 months ending with the third quarter of 2009.

Drug makers contend they have valid business reasons for the price increases. Of course they do. They want to increase their bottom line – and line their pockets – as much as possible before health care reform takes effect. In addition, the increase in drug costs is more than matched by the increased cost of intense lobbying.

Pfizer alone has spent more than $17 million in lobbying during the first nine months of this year, nearly twice it’s lobbying budget during the same period of 2008. Pfizer spokeswoman Kristen Neese told USA Todaythe spending reflects the commitment to “making our voice heard.”

Their voice is being heard all right. Enough that Democrats in Congress asked for two separate investigations of drug industry pricing Wednesday.

Believing the raising prices in pharmaceutical products is in expectation of new reforms, the House Democrats sent a letter to the Government Accountability Office asking them to conduct an expedited review of he price increases. “Any price gouging is unacceptable, but anticipatory price gouging is especially offensive,” the letter said. (NY Times)

It’s like increasing the price on a product before you put it on sale.

“I want to know if there’s a back-door move under way by the drug makers to recover some of the concessions they’ve promised for health care reform,” said Senator Bill Nelson of Florida.

It’s a pretty good bet there is.

Billy Tauzin, the former Republican House member from Louisiana who now leads the pharmaceutical trade group told Time, “We were assured: ‘We need somebody to come in first. If you come in first, you will have a rock-solid deal. Who is ever going to go into a deal with the White House again if they don’t keep their word? You are just going to duke it out instead.”

Really? And who is ever going to go into a deal with pharmaceutical companies again?

I don’t know what can be done now that the “horse is out of the barn,” so to speak, but I’m thinking the pharmaceutical companies have just lost their seat at the table.

Cheri Cabot, Politics Correspondent

Cheri’s column, “Personal About Politics,” published every week, will reflect on how the life of a 60 year-old, middle class woman is affected by politics, policy and the current state of the nation - a look at the personal aspects of politics. Her column is part of Gather Essentials.

Cheri is a freelance writer, living in Southern California.  She has two grown children and is the proud grandmother of three.

You can find all of Cheri’s columns on Personal About Politics at www.personalpolitcs.gather.com, The Obama Watch at theobamawatch.gather.comor her home page here, www.ccabot.gather.com.