Contact FreedomWorks

400 North Capitol Street, NW
Suite 765
Washington, DC 20001

  • Toll Free 1.888.564.6273
  • Local 202.783.3870

Blog

    Dems. hand big win to PhRMA at the expense of taxpayers

    Last night, the Senate voted on four amendments to Majority Leader Harry Reid's (D-NV) healthcare takeover bill.  One such amendment, brought forth by Senator Byron Dorgan (D-ND), would have allowed for the importation of FDA approved drugs from other countries.  Because medications are less expensive in foreign nations, allowing for their importation was proposed as a cost-cutting measure.  With cheaper drugs entering the American market, domestic pharmaceutical companies would be forced to lower prices in order to remain competitive.  However, Democrats voted down Senator Dorgan's amendment 51-48.


    President Obama's commissioner of the Food and Drug Administration Margaret Hamburg opposed the legislation even though during the 2008 campaign her boss, Mr. Obama, supported it.  In fact, as a member of the Senate, Obama co-sponsored the Dorgan bill.  Now, however, the Obama White House is changing its tune. 


    Over the summer, the Obama Administration met privately with members of the pharmaceutical industry.  At that meeting, drug companies pledged to cut consumer costs by $80 billion.  In exchange, the White House gave drug makers a "private promise" that certain reforms, such as allowing for the importation of drugs, would remain out of healthcare legislation.  


    With last night's vote, Senate Democrats made good on President Obama's promise to PhRMA and ignored his promise to the American people.  In place of the real change that then-Candidate Obama said he would to bring to the American drug market, the proposal in the Senate offers an individual mandate that will require and subsidize the purchase of health insurance.  If such subsidized insurance plans include coverage of prescription drug costs, drug sales will skyrocket and the industry will see extraordinary, subsidized profits.


    Of course, the Reid bill is not the first time that drug companies have lobbied in an attempt to gain massive profits from “reform.”  In 2003 the Medicare Prescription Drug Act was passed and it took effect in 2006.  The plan was intended to have Medicare pay for prescription drugs for seniors.  Drug companies lobbied hard and as a result, the legislation prevented Medicare from negotiating prices with the drug companies.  Two years after Medicare Part D went into effect, the Committee on Oversight and Government Reform chaired by Rep. Henry Waxman (D-CA) studied the results of the legislation.  Their report found that in the 6 months after the start of the new drug plan, the ten largest drug companies’ profits rose by over $8 billion—an increase of 27 percent and a 63 to 1 return on their 2003 lobby spending of $127 million. 


    If pharmaceutical companies see the same return on investment under the Reid proposal as they did when Medicare reform passed, their profits will be additional $15 billion per year. 


    And, as is typically the case with interactions between big business and big government, these new found profits will come at the expense of consumers and taxpayers.