Time for a brief comment on health care reform, now that Sen. Baucus has presented a bill to the Finance Committee (which, to be sure, I believe has already attracted over 500 proposed amendments). As is well known, the largest drug industry trade group, PhRMA, signed on to the whole idea of a large reform effort early, in exchange for a seat at the table (and a chance to make things go favorably). How's that working out so far?
As Steve Usdin at Biocentury writes, the answer is "fairly blatantly":
The parochial value of PhRMA’s controversial decision to cut a deal with the Senate Finance Committee and the White House became clear last week as details of the committee’s healthcare reform bill emerged that favor big pharma companies over their biotech siblings. The bill also pounds the medical device industry and slams laboratory service providers, sectors that didn’t agree on “voluntary” contributions to healthcare expansion. . .
. . .A 233-page summary of the America’s Healthy Future Act released by Finance Committee Chairman Max Baucus (D-Mont.) includes most of PhRMA’s healthcare reform wish list and has only one major provision pharma companies hope to kill: a commission with powers to constrain Medicare spending.
The tax put on medical devices by this bill has already been noted widely in the press, and I see that Sen. Kerry is already objecting to that provision - naturally enough, since Massachusetts has some big players in that area. The Senators from Guidant and Medtronics (also known as Indiana and Minnesota) are speaking up as well. The trade association for that industry (AdvaMed) apparently couldn't come to terms with Washington, so this tax is their reward - which, in a nutshell, is the sort of thing that keeps gradually turning me into a libertarian.
There are more examples. Biocentury goes on to detail an excise tax provision in the bill that's based on sales figures and market share. But this isn't calculated on total US sales, which is the method various biotech companies were pushing for. No, it's calculated by market share of sales to the US government, which (because of Medicare) tends to emphasize drugs for an older population. In general, if your drug is provided substantially through any government-supported program, (HIV medications come to mind), you're going to see a higher fee. Orphan drugs are exempt from the tax, which must gladden the hearts of several companies, though.
It's still way too early to get worked up over any specific provisions of any one bill, and there's plenty of room to wonder if anything substantial at all will get passed. But it is worth paying some attention to how the process works. When the same tactics are used in the private sector, the unfortunate phrase "protection racket" comes to mind. But government, well, that's different. Clearly.