Will the Democrats Try to Undo Part D (Redux)

  • by: |
  • 11/09/2006
Businessweek's John Carey has a nice article describing the hell awaiting drug companies come January when the Democrats take control of both ends of Congress...the question is, do the companies have what it takes to use meet this challenge and actually exploit the inherent weaknesses and contradictions in the Democrat proposals...

USA, 11/9/2006 - For drugmakers, the Democratic congressional election triumph means a return to the political crosshairs.

Nancy Pelosi (D-Calif.), widely expected to be the new Speaker of the House, has vowed to give the government the power to negotiate—and thus, she hopes, drive down—drug prices for Medicare patients. Henry Waxman (D-Calif.) and John Dingell (D-Mich.), now that they are back in power, "are licking their chops at the prospect of having hearings" on topics such as the sky-high price of some cancer drugs, says analyst Ira S. Loss of Washington Analysis, which assesses the impact of public policy on investors. The industry also may face a higher bar for drug approvals at the Food & Drug Administration.

So it's no surprise that, on the day after the Nov. 7 election, pharmaceutical stocks went down. The AMEX pharma index sank nearly 2%. Losers included everyone from Pfizer and Schering-Plough to Eli Lilly and Merck.

The scrutiny could be intense. In the next Congress, expect hearings—and well-publicized outrage—over the price of drugs like Genentech's cancer treatment Avastin, which can cost more than $50,000 per year. Expect the Pelosi-led House to quickly act on her promise by passing a measure aimed at driving down the cost of drugs in the Medicare program. Expect more talk about importing cheaper drugs from Canada, and more rhetoric about how the FDA may have moved too fast in the past, allowing risky drugs like Merck's Vioxx on the market. "

Well, we will see. The word is that the D's know the vaunted savings can't be had unless you rob seniors of the choice of drugs they do have. And the "third way" Democrats are likely to propose, requiring comparative effectiveness studies and driving prescribing to the drugs of most "value" will be caught up in methodological, biological and clinical disputes and leave them open to charges that they want to government to practice medicine.

I can see a funny ad around seniors trying to get their medicines from the government supply depot or a costco type place where you have to buy your one drug by the caseload...

"In the meantime, the pharmaceutical industry is raking in the profits that are coming from the Medicare drug benefit. One big winner: Lilly, whose third-quarter sales rose 7%, with profits up 10%, in part on the strength of Medicare prescriptions for its mental illness drug Zyprexa. "

"Raking in?" More seniors are using more medicines. Meanwhile the actual price of Zyprexa (not the retail or manufacturer price) has fallen as a result of price competition. Why shouldn't Lilly prosper? If you sell more, you make more. Check the profit margins of genetic drug firms since Medicare came online, particularly Teva and Mylan, generic drug manufacturers that have had about a 50 percent jump in earnings as a result of patent expirations and a switch away from brand drugs.

Why not make a big stink about those margins or the big profits PBMs and pharmacists will make by selling generic drugs at markup?

If the Democrats want eliminate profit from the prospect of increasing sales volume (sell more, don't increase profits) then the road ahead will be rocky indeed.

If I were "Big Pharma" I would run ads pairing patients with Parkinson's, juvenile diabetes and spinal cord injury with scientists from their companies and with scientists from the small money losing biotech firms they are now investing billions with that are doing work in stem cells and Parkinsons. The scientists would disappear one by one as a narrator talks about how Medicare price controls will make future cures disappear.

Drug companies have a lot at stake. If they don't have the backbone to defend their mission, we will all suffer.

Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

Blog Roll

Alliance for Patient Access Alternative Health Practice
Better Health
Biotech Blog
CA Medicine man
Cafe Pharma
Campaign for Modern Medicines
Carlat Psychiatry Blog
Clinical Psychology and Psychiatry: A Closer Look
Conservative's Forum
Club For Growth
Diabetes Mine
Disruptive Women
Doctors For Patient Care
Dr. Gov
Drug Channels
DTC Perspectives
Envisioning 2.0
FDA Law Blog
Fierce Pharma
Fresh Air Fund
Furious Seasons
Gel Health News
Hands Off My Health
Health Business Blog
Health Care BS
Health Care for All
Healthy Skepticism
Hooked: Ethics, Medicine, and Pharma
Hugh Hewitt
In the Pipeline
In Vivo
Internet Drug News
Jaz'd Healthcare
Jaz'd Pharmaceutical Industry
Jim Edwards' NRx
Kaus Files
Laffer Health Care Report
Little Green Footballs
Med Buzz
Media Research Center
More than Medicine
National Review
Neuroethics & Law
Nurses For Reform
Nurses For Reform Blog
Opinion Journal
Orange Book
Peter Rost
Pharm Aid
Pharma Blog Review
Pharma Blogsphere
Pharma Marketing Blog
Pharmacology Corner
Pharmaceutical Business Review
Piper Report
Prescription for a Cure
Public Plan Facts
Real Clear Politics
Shark Report
Shearlings Got Plowed
Taking Back America
Terra Sigillata
The Cycle
The Catalyst
The Lonely Conservative
Town Hall
Washington Monthly
World of DTC Marketing
WSJ Health Blog