While President Barack Obama and congressional leaders jockey for position in the U.S. debt reduction talks, the pharma industry is doing some negotiating of its own. That's because lawmakers are proposing billions in additional cuts in drug spending, provided via discounts from drugmakers.
The pharma industry already agreed to increased drug discounts as part of Obama's healthcare reform package. But with budget shortfalls forcing cuts to state spending--and deficit-minded politicians digging in for federal cuts--pharma is once again in the firing line. States all over the U.S. have pushed through big reductions to Medicaid spending, and some lawmakers say drug companies need to share the pain by offering discounts to low-income Medicare recipients, or "dual-eligibles."
"To let pharmaceutical companies get away with paying nothing while poor and disabled people lose health coverage is unconscionable," Rep. Henry Waxman said (as quoted by the Los Angeles Times). Discounts proposed by Waxman, and endorsed by a bipartisan fiscal commission, are said to be enough to save $112 billion over a decade.
It's a familiar spending target; lawmakers have proposed rebates on drugs for dual-eligibles repeatedly over the past couple of years. So PhRMA is adept at lobbying against it. This time, the organization has commissioned a study of the potential pharma spending cuts that found the discounts could dig into industry revenue by $20 billion annually. That, in turn, could touch off job cuts. As many as 260,000 jobs, the report says. "Startling potential job losses would result from undermining the business foundations of biopharmaceutical companies," PhRMA Executive Director John Castellani said during a conference call (as quoted by Bloomberg). We'll see whether the argument sways opinions on Capitol Hill.