We Get Shafted, Once Again

As posted previously, the White House has agreed to a backdoor deal with pharmaceutical companies: They have agreed to cut costs by $80b over the next 10 years, in exchange for a continued ban on price negotiations. Robert Reich says this is bad for democracy. Indeed, it is. But it is also bad for us. Consider these figures from 2007 (Source: Fortune magazine, July 23, 2007, via CNN.):

Company	Revenues	Profit
Johnson & Johnson	53,324.0	11,053.0
Pfizer	52,415.0	19,337.0
GlaxoSmithKline	42,730.6	9,915.0
Novartis	37,020.0	7,175.0
Sanofi-Aventis	36,998.4	5,026.1
Roche Group	34,702.8	6,285.4
AstraZeneca	26,475.0	6,043.0
Merck	22,636.0	4,433.8
Abbott Laboratories	22,476.3	1,716.8
Wyeth	20,350.7	4,196.7
Bristol-Myers Squibb	17,914.0	1,585.0
Eli Lilly	15,691.0	2,662.7

(Figures above in billions of dollars.)

If you do the math, you will see that the profits of just these 12 companies in 2007 fell barely short of $80b.

In essence, the pharmaceutical industry has agreed to give up 10% of its huge yearly profits for the next ten years, in exchange for the government dropping its huge negotiating power (and its pants). Not a bad deal--for the companies--if you ask me. And the White House has said "Yes, we will bend over." And, I ask, is the $80b a fixed dollar amount? In other words, if the drug industry's profits in coming years exceed this year's profits, then the % amount of savings is further reduced. The more I think about it, the more it stinks.

Oh, by the way: To sweeten the deal, the PhRMA has thrown in $150m of advertising in support of the White House health care reform plan.

It would be one thing (though it would still be wrong) if the President had decided that the real devil in the health care system is the health insurance sector, and that it is ok to make a deal with the lesser demon (PhRMA) to enable change that will substantially reform, and eliminate, the stifling power of the insurance industry. Pre-existing conditions, policy exclusions, denial of coverage, ever-rising premiums, and refusal to insure (adequately or at all) 30% of the American people are ignominious practices and should be done away forever.

If Obama's real goal was to tackle one overpowering industry at a time, his strategy would almost make sense. But from all we know, and from what has filtered out of the various committees over the last few weeks, the same backdoor deals are taking place between the Administration and the insurance industry as well. See this piece for details. The more we look, the more it looks like we're getting shafted, once again.

The goal of health care reform should not simply be to cover the uninisured. It should be to stop the runaway costs that have become a structural feature of the system. People are getting crushed not just by the absence of or the difficulty of getting health care, but also by its costs.

We were promised change we could believe in, but it's starting to look like it's change the usual suspects can believe in. I was hoping for better.