PhRMA offers help cutting Medicare drug costs, with caveats

Big Pharma is willing to do its part to cut the deficit; it would just like to do it in a way that is less painful than some in Washington are suggesting.

In a speech before the National Press Club on Thursday, the head of the industry's most persuasive trade association suggested that drug costs could be reduced by having private insurance plans cover the drugs provided in some other Medicare programs like they are in Part D, Reuters reports.

John Castellani, head of the Pharmaceutical Research and Manufacturers of America (PhRMA), said he was concerned by a proposal from the White House to use rebates to squeeze $135 billion out of Medicare over a decade. The administration says costs in that program are running higher per person than in other areas of Medicare. Castellani, however, said the Part D program has saved Medicare billions of dollars since it was created in 2006 by President George W. Bush.

There are some other reasons Big Pharma prefers the rules of Medicare Part D. They specifically exclude the sort of price negotiation and controls that other governments use to push drug costs down. They also mandate coverage for all drugs in 6 "protected classes," rather than allowing coverage to be limited to certain preferred--and often cheaper--products. 

Exactly what PhRMA and Castellani's standing is now with the White House and members of Congress is a little unclear. While Republicans tend to stand with big business, memos released by a congressional committee in June laid out how much help PhRMA provided President Obama in getting his health reform act passed. With Obamacare and deficit reduction big issues in the election, it is territory that must be tread carefully.

- read the Reuters story