Drugmakers Take Aim at Potential Changes to Medicare Rx Purchasing
The Pharmaceutical Research and Manufacturers of America is preparing a multimillion-dollar public relations campaign to extol the free-market health care system and "undercut an expected push by the Obama administration for price controls on prescription drugs," the Washington Times reports.
During his campaign, President-elect Barack Obama's health care proposal included changing Medicare rules to allow federal officials to negotiate lower prices for the program's drug benefit.
The change could decrease drug industry revenue by $10 billion to $30 billion annually, according to a report compiled last month by the Boston Consulting Group.
Obama also said he would hold drugmakers "accountable for the prices they charge and the harm they cause."
PhRMA Senior Vice President Ken Johnson said, "There's no question that next year will be a challenging year."
The group's campaign will include a television advertisement featuring spokesperson Montel Williams that does not criticize the Obama administration or any of its proposals, according to PhRMA.
Johnson said, "We're going to do an ad campaign that is designed to make people aware of the importance of preserving your free-market health care system." He added that PhRMA recognizes that "some reforms are needed in order to keep that system vibrant."
Peter Lawyer, a partner with Boston Consulting Group, said, "If you start to take a pretty big price decrease out of that large market, it has an enormous impact on drug companies and really their ability to generate their type of shareholder return that they have had in the past."
According to Lawyer, less revenue from Medicare would lead drug companies to charge more for drugs sold outside the program. In addition, lower profits would mean less money for research and development, which would result in fewer new drugs on the market, he said.
Drugmakers gave more than $1.6 million to Obama's presidential campaign, almost triple the amount given to former Republican presidential nominee Sen. John McCain (Ariz.).Johnson said, "We've been moving the pieces on the chess board around for some time now getting ready for next year, and we've got a great game plan in place." He added, "We think we've earned a right at the table, and we're optimistic that at the end of the day, the majority of members of Congress will recognize the importance of the pharmaceutical industry to health care" (Lengell, Washington Times, 11/14). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.