Waxman, though, wasn’t a part of those negotiations and has said that he doesn’t feel obliged to honor a deal to which he never agreed. His latest comments, via FireDogLake, came yesterday:

“The President and the Senate made very poor deals with PhRMA,” Waxman said, explaining the deal whereby the drug industry offered $80 billion dollars in givebacks in exchange for their support for the overall bill. “Rahm (Emanuel) said that’s OK,” Waxman said, but he noted that under the deal, the industry would get millions of new customers and Americans would still pay far more than the rest of the industrialized world for prescription drugs.

“I have said that I am not bound by that agreement,” Waxman said, noting all the provisions in the House bill which go further than the PhRMA deal. … Waxman said that in the conference, where he expected the President to sit down personally, “I’m going to say, ‘Are we interested in protecting the profits of the drug companies or protecting seniors?’”

Although the House does not reconvene until Jan. 12, and the Senate is out until the Jan. 19, leaders from both chambers have returned to Washington this week to begin ironing out the differences between the chambers’ health reform bills, of which Waxman’s drug provision is just one.

Yet two days before that high-profile White House announcement, Senate Finance Committee Chairman Max Baucus (D-Mont.) was trumpeting the fact that he had negotiated the deal. There were no secrets being kept here. Indeed, here’s part of Baucus’ June 20 statement:

Senate Finance Committee Chairman Max Baucus (D-Mont.) announced he secured an $80 billion commitment from the pharmaceutical industry to reduce Medicare prescription drug costs for seniors. The deal struck by Baucus and the nation’s pharmaceutical companies with the participation of the White House includes a provision to narrow the gap in coverage, often called the “doughnut hole,” with payments from the drug companies to cover up to 50 percent of the cost of brand name medicine in Medicare’s Part D prescription drug program.

So it was Baucus to cut the deal and the White House to endorse it. OK, fine. What makes this notable is that Baucus more recently seems to have forgotten that he was the primary negotiator on behalf of the Democrats. For example, when the Finance Committee shot down an amendment to the health reform bill that would have fully closed the doughnut hole, Baucus voted against it because he said it would undermine the deal with Big Pharma — a deal he placed squarely on the shoulders of the administration.

“We have to find some other time, some other way [to close the doughnut hole],” Baucus said. “The White House did reach an agreement.”

It’s worth remembering that, as Senate leaders are now promising to close the doughnut hole 100 percent, it was those same leaders who limited their options in paying for it.

In a letter yesterday to GAO, Reps. Henry Waxman (D-Calif.), Charlie Rangel (D-N.Y.), Pete Stark (D-Calif.) and John Lewis (D-Ga.) voiced concerns that the companies are “artificially raising prices for certain pharmaceutical products in expectation of new reforms that could otherwise reduce prescription drug prices or price growth by encouraging patients and the government to be more efficient purchasers.”

Any price gouging is unacceptable, but anticipatory price gouging is especially offensive. We request that the GAO prepare on an expedited basis a report that analyzes recent trends in prescription drug pricing. In addition, we request that you prepare a proposal to ensure ongoing monitoring of pharmaceutical manufacturer pricing practices, and periodically report to the Congress on your findings.

Not that the pharmaceutical industry is taking the Times’ report sitting down. In a statement released Monday, Ken Johnson, senior vice president of the Pharmaceutical Research and Manufacturers of America, said the price increases represent “the natural result of market forces.”

As it is, Medicare patients are forced to pay the full cost for their prescription drugs when annual expenses fall between $2,700 and $6,154. Under the new agreement, drug companies would pick of 50 percent of the tab for some of those patients falling into Medicare’s so-called doughnut hole.

“This gap in coverage has been placing a crushing burden on many older Americans who live on fixed incomes and can’t afford thousands of dollars in out-of-pocket expenses,” Obama said today, with key Democratic lawmakers and the head of AARP by his side.

Our goal, our imperative, is to reduce the punishing inflation in health care costs while improving patient care. And to do that, we’re going to have to work together to root out waste and inefficiencies that may pad the bottom line of the insurance industry, but add nothing to the health of our nation. To that end, the pharmaceutical industry has committed to reduce its draw on the health care system by $80 billion over the next 10 years as part of overall health care reform.

For the industry, it’s not quite the sacrifice it appears to be. Big Pharma has already profited handsomely from the creation of the prescription drug program. And, as The Hill’s Jeffrey Young points out today, their $80 billion commitment could pay dividends in the end.

Drug makers may be seen as forfeiting $80 billion but the reality is not so simple. Many seniors who would avail themselves of half-price medicines would simply have done without in the absence of discounts.

Indeed, the Kaiser Family Foundation reported last year that about 3.4 million Medicare beneficiaries hit the doughnut hole in 2007, of which roughly 15 percent stopped taking their medicines as a result.

“Moreover,” Young adds, “PhRMA’s collaboration with [Senate Finance Committee Chairman Max Baucus (D-Mont.)] also could shield them from legislative proposals that would cut deeper into their revenue.”

–

You can follow TWI on Twitter and Facebook.

Two bills introduced in Congress recently stake out rival positions on a key issue related to health care reform. Which approach ultimately prevails will help determine whether the pharmaceutical industry maintains the support that Pfizer CEO Jeffrey Kindler voiced Wednesday for President Obama’s plan’s to overhaul the nation’s health care system.

Reps. Anna Eshoo (D-Calif.), Jay Inslee (D-Wash.) and Joe Barton (R-Texas) introduced a bill Tuesday that would give manufacturers of new drugs up to 14 years of market exclusivity before generic versions could come onto the market. Earlier this month, Rep. Henry Waxman (D-Calif.) introduced legislation providing five years market exclusivity. Big Pharma hailed the Eshoo bill while the Obama administration has indicated it prefers the Waxman approach.

Can the drug companies live with shorter exclusivity, which cuts into the big profits margins of popular drugs?

Maybe, says Kindler, who heads the world’s largest pharmaceutical manufacturer. He told CNN, “My guess is that, assuming there is comprehensive health care reform and it’s passed, there will be elements of any bill that any number of participants won’t like, because everybody will undoubtedly have to make compromises and contributions. And I’m sure we will be no exception, nor should we be, by the way.”

In an op-ed that appeared today in The Washington Post, former House Speaker Tom Daschle (D-S.D.) — who withdrew his nomination to be President Obama’s secretary of health and human services earlier this month amid a tax scandal –  said the prospect for comprehensive health care reform has never been better, in part, because “reformers have some new and unlikely allies,” including the insurance and pharmaceutical industries.

Since his bid to become HHS secretary failed, Daschle has become more of a cheerleader, not a czar. But that doesn’t mean he’s wrong.

–

The prospect for following TWI on Twitter has also never been better. Please do so here.

Makers of generic drugs, for example, are smiling. Kathleen Jaeger, president of the Generic Pharmaceutical Association, said Obama’s plan promises to “substantially reduce health care costs by increasing access to quality care at affordable prices.”

Big Pharma is not so happy. That’s because Obama has now committed to limiting exclusive rights to new medicine to five years and to existing drugs for three years, compared to the 14 years that has been sought by the big pharmaceutical companies that develop the drugs. The new approach would transform billions in drug company profits into billions of dollars of consumer savings, making the whole trillion dollar package just a little more affordable.

Billy Tauzin, the former Lousianiana congressman turned president of the Pharmaceutical Research and Manufacturers of America (salary: $2 million a year), murmured about the importance of drug innovation but said “PhRMA is committed to working with President Obama and lawmakers on both sides of the aisle.”

Translated into plain English, Tauzin is promsing a lobbying blitz to curb generics, spearheaded by the likes of Pfizer (which spent $12.1 million lobbying and gave $1.8 million in political contributions in 2008); AmGen ($10.1 million in lobbying; $1.4 million in contributions); and GlaxoSmithKline ($7 milion in lobbying; $1.1 million in contributions).

But in a sign of how times have changed, Tauzin, who opposed the Clinton administration’s health care plan in 1993, isn’t going rejectionist. He also warmly endorsed the goal of covering all Americans, extolled S-CHIP, and said health care reform is integral to economic recovery.

In other words, radical change is on the table.