You Might Be Stuck Paying Higher Drug Prices at the Pharmacy
ROMANS: On the surface it sounds like a victory for proponents of health care reform. The pharmaceutical companies are onboard working with Senate Democrats in the finance committee, even receiving praise from the White House. For an $80 billion pledge to reduce costs over are the next ten years. Former Clinton cabinet member Robert Reich said he's appalled by the deal between the White House and the pharmaceutical industry. I asked him what an alliance between big pharm and the White House will mean for your drug costs.</s>ROBERT REICH, FORMER SECRETARY OF LABOR: Christine, we don't know the details of the deal. In fact, the White House has been moving a little around on whether there was a deal or what the terms were. But according to the pharmaceutical industry, there was a deal, there is a deal and a big part of the deal is that Medicare will not be allowed in the future. Just as it hasn't been under George W. Bush, to negotiate lower drug prices using a huge bargaining leverage that it otherwise would have. This would mean if in fact this was the deal that drug prices would stay quite high and it would put a crimp in overall long-term reductions in health care spending.</s>ROMANS: Your column, your piece on this issue was scathing. You are very outspoken about what you see as an alliance between these two. We spoke to the pharmaceutical vice president Ken Johnson, this of course is the group that represents the drug companies and we asked him about this deal and the reports that it's going to save about $80 billion in health care costs in exchange for the government as you point out agreeing not to use purchasing power to lower drug costs. This is what he said; he said "There is no secret agreement. We were clear with the administration from the very beginning that you can sign us up as partners in health care reform but we will not support price controls because of its impact on research and development. When the Senate and Finance Committee releases details the plan people will see at least $30 billion in savings for seniors as a result of fixing the doughnut hole and approximately $50 billion as a mix of fees and rebates to expand health coverage for millions of Americans." How do you respond to their response, I guess?</s>REICH: Well I would say that the $80 billion they're promises to save is very small in comparison with all of the money that we otherwise would save if Medicare and Medicaid could negotiate lower drug prices. Remember, the baby boomers are approaching the time when they will be eligible for Medicare. And the actual population of Medicare and Medicaid eligibles and not only because they're baby boomers but also because of this new health care plan, should it go through, is going to be very, very large. So if there are going to be savings through negotiating lower drug prices those are going to be much, much greater than $80 billion over ten years.</s>ROMANS: Back in 1984, the last time we tried this and it didn't get through, pharma was an obstacle to healthcare. They were opposed to some of the proposals on the table. What could President Obama have done to neutralize their opposition to universal health care without taking away the government's bargaining power over drug prices?</s>REICH: Well, that's a very good question. I mean the pharmaceutical agency, industry, and also the AMA and the doctors, the hospitals, they last time around in 1994, and I was there, I had a front seat, they all opposed health care reform because it was going to hurt their bottom line. It was going to rob them of profits they thought. This time, the Obama administration may be wisely, as a matter of tactics Christine, decided that it would make deals and therefore essentially buy them off so they would not have that very strong opposition that they had before. Well, the problem is, if you buy them off, then you are essentially going to rob yourself and rob the public of the savings that you want to get over the long-term in terms of health care reform. How do you balance the two? Would it have been possible or is it possible to have a much stronger health care bill that actually keeps the bargaining leverage of Medicare and Medicaid might have over the drug industry and still get the pharmaceutical industry in tow? I don't know.</s>ROMANS: Mr. Secretary, about 15 or 20 seconds here, do you think that they'd get reform this time around and do you think it looks anything like the proposals that are on the table now? Is there a lot more horse trading in politics before we're done?</s>REICH: Oh, there is going to be a lot more horse trading, Christine. There is enough momentum behind universal health care reform. I think we will get it, the question is, and what exactly will we get?</s>ROMANS: It's time now for a heart to heart talk with your parents about their money and their retirement. Why you absolutely must talk to your senior parents before it's too late. Coming up next.