Even as drug makers promise to support Washington’s health care overhaul by shaving $8 billion a year off the nation’s drug costs after the legislation takes effect, the industry has been raising its prices at the fastest rate in years.
In the last year, the industry has raised the wholesale prices of brand-name prescription drugs by about 9 percent, according to industry analysts. That will add more than $10 billion to the nation’s drug bill, which is on track to exceed $300 billion this year. By at least one analysis, it is the highest annual rate of inflation for drug prices since 1992. [Emphasis added]
The White House claimed a victory when PHARMA and its members agreed to the cost reduction and the Senate dutifully wrote that promise into several of its versions of the reform bill, but once again, the public will pay for the hollowness of the promise:
...the drug makers have been proudly citing the agreement they reached with the White House and the Senate Finance Committee chairman to trim $8 billion a year — $80 billion over 10 years — from the nation’s drug bill by giving rebates to older Americans and the government. That provision is likely to be part of the legislation that will reach the Senate floor in coming weeks.
But this year’s price increases would effectively cancel out the savings from at least the first year of the Senate Finance agreement. And some critics say the surge in drug prices could change the dynamics of the entire 10-year deal. [Emphasis added]
The drug companies have trotted out their perennial excuse for the price hikes: more money is needed for research into newer and even better drugs, especially since the patents on current drugs run out. Oddly enough, I have yet to see a news article which puts forth the annual budget for any given pharmaceutical company's research as compared to the budget for marketing (advertising and the free rides given to doctors and hospitals for prescribing the drugs). That would be useful information at a time like this, yes?
I knew there had to be a reason for PHARMA to make such a grandiose gesture at the White House: its representatives knew it was actually going to be a windfall of enormous proportions. But, hey! It's the marketplace at work.