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Drug industry would lose in health bill

Nancy Marshall-Genzer Nov 5, 2009

Drug industry would lose in health bill

Nancy Marshall-Genzer Nov 5, 2009


Kai Ryssdal: This was a big day for endorsements on Capitol Hill. Both the AARP and the American Medical Association got behind the House Democratic plan for health care reform. The endorsements weren’t totally unexpected. Both groups are going to get pretty much what they want out of the bill. But the going may be rougher for the drug industry. President Obama struck a deal with pharmaceutical makers back in the early days of the debate. The industry agreed to $80 billion in cuts. Now the House is saying not so fast. Marketplace’s Nancy Marshall Genzer explains the price of bringing business to the table.

NANCY MARSHALL GENZER: The House bill would allow the government to negotiate drug prices for Medicare beneficiaries. That would save the government a lot of money. But the drug industry would end up giving back much more than the $80 billion it agreed to in its deal with the White House.

Eric Assaraf is a health care industry analyst for Concept Capital’s Washington Research Group. He thinks drug makers could more than afford it.

ERIC ASSARAF: I would argue they could probably stand to afford $160 billion.

Assaraf says that’s big money that the pharmaceutical industry didn’t bargain on paying. And it could be a huge sticking point for drug makers when the House and Senate try to merge their bills.

ASSARAF: I don’t think that that was part of the deal that they made with the administration and I think that, as this process goes on, that’s going to be a big bone of contention.

But House Democrats don’t feel bound by the White House deal, and some are grumbling that the drug industry got too big a break.

Geoffrey Joyce teaches economics at USC.

GEOFFREY JOYCE: There’s a belief that they got off easy, but I think there’s some desire in the administration to say, we’re going to reward those who come up first and support us at the early stages with, I guess more attractive arrangements for their industry.

David Certner lobbies Congress for AARP. He says President Obama remembered how the health care industry helped sink the Clinton administration’s health care overhaul. He realized he might have to compromise.

DAVID CERTNER: People have learned from the past and learned from history, and have learned that you can’t take on the entire health care industry. You need to bring them into the discussion, bring them into the debate.

And it might cost you. Did the Obama administration give away too much to bring the drug industry to the table? Certner says we won’t know that until a final health care overhaul plan has been hammered out.

In Washington, I’m Nancy Marshall Genzer for Marketplace.

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