Back in June, well before the flurry of health-care reform hit Congress, the pharmaceutical industry negotiated its contribution to lower health-care costs with the White House. The industry agreed to offer discounts for seniors in the Medicare doughnut hole to the tune of $80 billion.
The strategy seemed sound. By getting in early, before the government started tasting blood, maybe the industry could get off with a reasonable concession. The medical-device industry didn't do that, and companies like Medtronic
Unfortunately, the preemptive strike doesn't look like it's going to work, as Congress views the deal as a slap on the wrist.
The bill that passed the House of Representatives contained a provision for a bigger discount for low-income senior citizens on Medicare. It also allows the government to negotiate lower prices for Medicare recipients. I'm not convinced that acting like Canada is the best way to solve the problem, but that seems to be where we're headed.
Now the Senate looks like it may not stick with the $80 billion deal, either. When all is said and done, the concessions could be more like $100 billion. Assuming the Senate bill passes, we'll have to wait and see what the final bill looks like when it comes out of the conference committee before we know how much it'll cost the industry.
The good news is that Pfizer
How much it'll cut into their net margins remains to be seen.
Is pharma doing its fair share to help lower costs? Are you worried about your investments in this area? Let us know in the comments box below.