ObamaCare’s ‘Sweetheart Deal’ for PhRMA

The New Republic’s Jonathan Cohn reports that back in March, IMS Health projected slightly negative revenue growth for the pharmaceutical industry but recently changed that projection to 3.5-percent annual growth from 2008 through 2013.

“What changed?” Cohn asks. “A major factor, according to IMS, was the emerging details of health care reform … Put it all together, and you have more demand for name-brand drugs … enough to boost revenue significantly.” And:

“If this bill is implemented,” the report concludes on page 138, “an increase in prices on new drugs can be expected.”

How could this be happening?  Oh yeah:

That brings us back to the deal that the Pharmaceutical Researchers and Manufacturers of America, which represents those companies, made with the White House and Senate Finance Committee …

The industry agreed to embrace health care reform and, later on, launched a massive advertising campaign to promote the cause. In exchange, the White House and Senate Finance–which had been asking various industries to pledge concessions that would help pay for the cost of coverage expansions–promised not to seek more than $80 in reduced payments to drug makers.

To an industry as big and profitable as the drug makers, giving up $80 billion over ten years wouldn’t seem like much of a sacrifice–a point critics started making right away. But if IMS is right, the drug industry wouldn’t even be giving up $80 billion, in any meaningful sense of the term. If anything, it’d be making more money. Maybe quite a lot of it.

Which is what I predicted, both here and here.

Cohn concludes, “the drug industry has enormous leverage in Congress.” But Cohn still supports the president’s health care takeover. Or is it PhRMA’s health care takeover?