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Big Pharma lobbies vs. drug discounts

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As legislators in Washington struggle to make progress on raising the country’s debt ceiling, the pharmaceutical lobbying machine has shifted into high gear behind the scenes. After Obama suggested drug makers offer discounts to low-income seniors, the pharmaceutical industry has been targeting any proposal that might affect their bottom line.

Democrats are reacting to calls for cuts to entitlement programs, which would result in seniors being forced to pay more, by angrily demanding that Big Pharma chip in, too. “To let pharmaceutical companies get away with paying nothing while poor and disabled people lose health coverage is unconscionable,” said California Democrat Henry Waxman, who has sponsored legislation that would require drug makers to offer discounts that would save seniors and taxpayers $112 billion over 10 years.

The pharmaceutical companies already provide discounts to Medicaid beneficiaries, but when Congress created Medicare Part D, the industry killed discounts for seniors eligible for both programs, known as “dual-eligibles.” Numbering nine million strong, this group of Americans has health-care costs that are among the highest in the nation.

Careful of its image, the industry, via its lobbying arm, the Pharmaceutical Research and Manufacturers of America, has kept its efforts from public view. The group’s vice president, Karl Uhlendorf, recently issued a statement against greater discounts. “Such policies would fundamentally alter the competitive nature of the [Medicare Part D] program and undermine its success.”

The pharmaceutical industry has one of the best-funded lobbies in Washington, and thanks to their efforts in 2009 and 2010, during the health-care reform debate, they successfully beat back demands that they be forced to contribute greater discounts. They did, however, offer $80 billion to help close the Medicare Part D “doughnut hole,” in exchange for Medicare being prohibited from using its bargaining power to negotiate lower drug prices.