Saturday, August 15, 2009

Big Pharma Swallows Obama's Pill   [Robert Costa]

When Big Pharma cut an $80 billion deal with the White House last week to help fund Obamacare via prescription-drug discounts, both the Left and the Right called foul. “Rancid,” moaned The Nation. An editorial in the Wall Street Journal blasted Billy Tauzin, PhRMA’s chief lobbyist, declaring the former congressman to be looking “less like Dr. Faustus and more like Jack, trading away his industry for magic beans.” NR’s Rich Lowry observed that “even if the deal holds, PhRMA will be at the mercy of a government system that will tend to squeeze out even those private players who have obligingly assisted in creating the predicate for their own destruction.”

Ken Johnson, a Tauzin adviser and PhRMA’s senior vice-president, acknowledged to NRO on Friday that he’s feeling the heat, though more from pharmaceutical-company leaders than from politicos. “There’s some angst right now, but we made it clear that this was never going to be easy. It’s a torturous process, with peaks and valleys,” he said. “We knew from the beginning that this was going to be a rollercoaster ride, with ups and downs and times where you close your eyes and hold on for dear life. At the end of the ride, are you smiling or sick to your stomach?”

Dyspepsia may already be here. On Thursday, Fox News reported that Big Pharma, though nodding along with the president on health-care reform, now finds itself fighting with the White House on “follow-on biologicals,” the industry’s innovative drugs that drive much of its business:

Congress has backed drugmakers who want to hold on to their data exclusivity for 12 years before letting other companies develop similar versions of their products. On Tuesday, the president called for drug companies to reduce that span to seven years. He has an ally in the AARP, the nation's largest seniors group.

The drug manufacturers, however, say companies should have a longer time to keep their product exclusive since they spent so much money on bringing the drug to market in the first place. 

"On average it's about $1.2 billion a company spends to get a biologic on the market. And that's well before the cost of actually building a facility, to manufacture the biologic, which often times run anywhere from a quarter billion to half a billion dollars to get on the market," said Lori Reilly, vice president of policy for the Pharmaceutical Research and Manufacturers Association.

Nonetheless, PhRMA, said Johnson, still believes its deal with Obama was a necessary compromise. “What we’re trying to do is move the debate closer to the center. That said, we need health-care reform but should not sacrifice medical progress or set us on a path towards a single-payer health-care system.”

And don’t try to tell PhRMA that the sky is falling on its industry. “We remain convinced that a commonsense, bipartisan bill will emerge in Congress that we can embrace wholeheartedly,” said Johnson. Still, “if the wheels come off the train, on issues like price controls, we’ll have serious concerns.” Johnson declined to get into specifics about what would trigger a derailment.

He was, however, more than ready to deflect media criticism. “People from both sides of the issue are going to say nasty things at times,” said Johnson, with regards to the Journal editorial. “The Wall Street Journal has long advocated free-market principles [and argued] that we have started down that slippery slope towards a single-payer system. Our argument is that we’re heading that way anyway, if we don’t work to rein in health-care costs.”

“The $80 billion in cost-saving we pledged is not loose change found in the sofa. It will force companies to make very tough decisions about which medicines to pursue. At the same time, it provides us with certainty that will help companies make long-term R&D decisions. We told the White House and Congress that we know our business model better than anyone else. One of the reasons that we want to be a participant is to avoid catastrophic job losses. By being at the table, we were able to have input in that we could offer $80 billion, without continuing down that road.”

Whether or not the $80 billion pill PhRMA is peddling to its CEOs is any good for its health will be determined over the coming months. One diagnosis, however, is already clear. As Ron Smith noted in the Baltimore Sun on Friday: “At least the health reform bill is good for somebody: lobbyists.”

08/15 12:53 PMShare