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Marketplace Morning Report
Commentary

Big Pharma deal sets bad precedent

Marketplace Staff Aug 12, 2009
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TEXT OF COMMENTARY

Kai Ryssdal: As with most big negotiations, there’s some give a little, get a little going on with the president’s health care overhaul. That’s just the way things work. But the news last week of a deal between the White House and big pharmaceutical companies over drug pricing struck some as a step too far. Commentator Robert Reich for one.


ROBERT REICH: The White House seems to be backing away from it’s promise to Big Pharma that any health care legislation will bar the government from using its huge purchasing power to negotiate lower drug prices.

I’m glad the White House is having second thoughts about this deal, because it was basically the same deal George W. Bush struck in getting the Medicare drug benefit. And it’s been a bonanza for the drug industry. A continuation would be an even larger bonanza, given all the boomers who will be enrolling in Medicare over the next decade.

And it would be a gold mine if the deal extended to Medicaid, which will be expanded under most versions of the health-care bills now emerging from Congress, and to any public option that might be included.

What did the White House seek to get in return? First, a promise from the industry to contain future drug costs by $80 billion. That’s good. But even if enforceable, I’d bet the bonanza Big Pharma would reap from the deal would far exceeds $80 billion. Otherwise, why would it have agreed? So the net effect would be higher drug prices and more expensive health care.

The White House apparently also got something even more important: Big Pharma’s support for universal health care. In fact, the industry is spending more than $150 million on TV ads in support — more money than John McCain spent on TV advertising in last year’s presidential campaign.

I can understand why the White House would want this deal. Having had a front-row seat in 1994 when Big Pharma and the rest of the health-industry complex went to battle against Bill Clinton’s health care plan, I know first hand how effective that onslaught can be.

But the deal could set a terrible precedent. How soon will it be until big industries and their Washington lobbyists are so politically powerful that secret White House industry deals like this are prerequisites to any important piece of legislation? And when will it become standard practice that such deals come with hundreds of millions of dollars of industry-sponsored TV ads designed to persuade the public that the legislation is in the public’s interest?

I want universal health care. But I also want a thriving democracy.

RYSSDAL: Robert Reich is a professor of public policy at the University of California, Berkeley.

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