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Report: White House Deal Shields Big Pharma from Competition. Why?

Watch this first: Bill Moyers interviews Melody Petersen on the marketing of "Our Daily Meds."

The NYT is confirming what we feared was true: the White House deal with Big PhRMA to reduce the drug manufacturers’ prices by $80 billions over ten years included White House promises not to require the manufactures to face competition or negotiations with Medicare.

When the deal was announced in June, the WH refused to release details but hailed it as a sign that Big PhRMA would we willing partners in the health care reform effort. So we’ve been getting the "good" Harry and Louise ads paid for by Big PhRMA.

But the price of that cooperation will be to allow the drug companies to sustain drug costs for Americans well above levels that could be justified by competition. From the Times article:

Pressed by industry lobbyists, White House officials on Wednesday assured drug makers that the administration stood by a behind-the-scenes deal to block any Congressional effort to extract cost savings from them beyond an agreed upon $80 billion.

Drug industry lobbyists reacted with alarm this week to a House health care overhaul measure that would allow the government to negotiate drug prices and demand additional rebates from drug manufacturers.

In response, the industry successfully demanded that the White House explicitly acknowledge for the first time that it had committed to protect drug makers from bearing further costs in the overhaul. The Obama administration had never spelled out the details of the agreement.

So now the House’s original Blue Dog, Billy Tauzin, now the head of the big pharma trade group, is shaking down the White House, exposing the deal, and demanding that Rahm Emanuel keep the Congress from forcing drug manufacturers to accept Medicare negotiations or Canadian competition. And this is after the drug kings have already pressured Congress into agreeing to lengthy patent and other protections against generic drugs.

The promised savings applied only to the purchase of brand name drugs purchased by seniors in the donut hole, which Congress is trying to end. And the $80 billion in promised price reductions? That small piece of Medicare drug costs is a drop in the bucket in the nation’s total drug bill.

The White House has been telling the American people that we need to have an insurance Public Option to compete against the private, for-profit insurers to encourage price reductions and to keep the insurers honest. But the same arguments apply with at least equal force to the major drug companies, whose record of deceptive advertising, misrepresentation (here and here), corruption and price collusion (more here, here, and here, and here) are every bit as offensive as the mega insurers’ practices.

The Times notes the deal was negotiated by Senator Max Baucus, with WH participation and approval. The LA Times version adds the deal was cut in the White House with Rahm Emanuel. So what should we expect from the WH/Baucus’ negotiations with Republicans on the rest of the reform package?

Video, Bill Moyers interviews Melody Petersen, author, Our Daily Meds
WSJ, background on House efforts to reintroduce Medicare drug negotiations
Dean Baker on the merits of drug patents
Consumer Reports, initial reaction and comparison with certain generic drugs
James Ridgeway, Mother Jones, PhRMA’s Phony Gift to Reform

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John has been writing for Firedoglake since 2006 or so, on whatever interests him. He has a law degree, worked as legal counsel and energy policy adviser for a state energy agency for 20 years and then as a consultant on electricity systems and markets. He's now retired, living in Massachusetts.

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