AARP or No, Big Pharma's $80 Billion Discount Drug Offer Is Just a Smidgen

Obama can't make healthcare universal until expensive drugs are affordable and available for all.

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By Bonnie Erbe, Thomas Jefferson Street blog.

So the group that no one wants to get old enough to be asked to join, the American Association of Retired Persons, is once again displaying its potent public relations muscle. Today, its leaders walk across town (D.C., that is) to the White House to make a small contribution to cutting healthcare costs. AARP, the self-proclaimed largest American seniors lobby, is turning over to the Obama administration an offer by drug manufacturers to contribute $80 billion over the next decade to reduce the cost of comprehensive health reform, in part by discounting the price of Medicare prescriptions. From the Washington Post:

After weeks of secret talks, the pharmaceutical industry trade group voted Friday to dedicate $80 billion to lowering the price of medicines sold to seniors and the government. The unusual offer by the Pharmaceutical Research and Manufacturers of America (PhRMA) is part of its effort to convince skeptical lawmakers that it backs major health-care legislation.

Though the agreement represents a fraction of the total cost of health-care reform, it has been managed for maximum public relations exposure.

News of the PhRMA vote leaked out Friday night. On Saturday afternoon, Senate Finance Committee Chairman  Max Baucus (D-Mont.) put out a news release announcing that he had "secured an $80 billion commitment" from drugmakers. Yesterday, AARP let it be known it supported the action. Today, cameras will be invited to record the White House ceremony celebrating the accord.

Eighty billion dollars, even over 10 years, is a lot of money. But it's a smidgen of what will need to be saved to bring down the cost of healthcare.

I have never understood how the pharmaceuticals get away with charging one price for a drug in the U.S. (for example, $1,000 per month for my father's Thalidomide when he was dying of multiple myeloma, cancer of the bone marrow) and so much less for that same drug in a border country (1¢ per tablet in Mexico, as reported by the Wall Street Journal when my father was on Thalidomide). One pharmaceutical executive explained to me that prices here are high because this is where the research is done and the U.S. market can bear higher prices. Another told me since other governments negotiate as single payers, they drive down drug prices.

Whatever it is, the Obama administration will not succeed in reforming healthcare, or more accurately, the high cost of health insurance, until it finds a way to make expensive drugs affordable and available to the insured middle class.

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