[jinx]

Why did Obama give PhRMA a great deal when even the Dems don't agree with it?

Representative Henry A. Waxman, the California Democrat who heads the Energy and Commerce Committee and helped write the House health care bill, vowed to fight the White House, asserting that it was conceding too much to the powerful drug industry lobby, PhRMA.
“PhRMA would like to see if they can get a bargain,” Mr. Waxman said. “I think that PhRMA should contribute more than PhRMA wants to contribute.”
Under pressure from drug industry lobbyists, the White House for the first time Wednesday clarified its commitment to a behind-the-scenes deal negotiated by the Senate Finance Committee in June. It would limit the drug makers’ share of the cost of a health care overhaul to a total of $80 billion over 10 years without imposing other savings sought by House Democrats, like the government’s negotiation of prices for the drugs it buys under Medicare.

We know we can squeeze more from the system,” Ms. Pelosi told a Washington Post blogger a few weeks ago. “The minute the drug companies settled for $80 billion, we knew it was $160 billion.”
“The president made the agreements he made,” she added. “And maybe we’ll be limited by that. But maybe not!”

Some members of the Finance Committee said Thursday that they, too, were surprised by the explicitness of the promise to the drug makers negotiated by their chairman, Senator Max Baucus, Democrat of Montana, and the White House.



“I think we could do more,” said Senator Olympia J. Snowe, a Maine Republican involved in the panel’s health care talks. “It wasn’t enough.”
“When I read about it, it gave me heartburn,” said Senator Charles E. Schumer, Democrat of New York and a member of the Senate Finance Committee.
Asked about his chances of undoing the deal, Mr. Waxman said, “I don’t do handicapping.”

Profit
Profit
Profit
Dems speak out on drug industry profits
profit

Profit

• Aggressive advertising: Since the federal Food and Drug Administration (FDA) relaxed the rules governing TV ads in 1997, the drug industry has increased its direct-to-consumer spending by roughly 40 percent a year. (Last year, ad spending was up 41 percent, according to Fortune.) As a result, two companies – Merck and Pharmacia – spent $460 million on ads in 2000, which was 20 percent more than Burger King.

• Lower tax rate: A 1999 study by the Congressional Research Service found that thanks to a variety of tax credits, the effective tax rate for drug companies was 16 percent compared to the overall industry average of 27 percent.

• Corporate welfare: According to a study released by the FDA in January 2000, one relatively new government incentive alone accounts for $600 million in additional annual profits. The so-called Pediatric Exclusivity Provision gives companies an extra six-months of monopoly patent protection in exchange for conducting tests on children. But rather than use the incentive to primarily study drugs most important to children – as Congress had hoped – drug companies used it for blockbuster products, such as Claritin, that stood to gain the most from a six-month patent extension. The pediatric provision sunsets at the end of this year and its congressional sponsors, Sens. Mike DeWine (R-Ohio) and Chris Dodd (D-Conn.), are pushing for permanent authorization. The FDA estimates this would cost consumers $14 billion over 20 years, by delaying the market entry of lower-priced generic drugs.

Finally, it's important to note that the drug company's annual reports reveal where their revenues go – and what their priorities really are. The drug industry has long maintained that it needs extraordinary profits to fuel risky and expensive research into new medicines. But the reports show that the companies plow far more into profits and marketing than into research and development (R&D). Consider:

• Fortune 500 drug companies channeled 17 percent of revenue into profits last year and 30 percent into marketing and administration – yet they spent just 12 percent of revenues on R&D. (see Graph 3)

• Eight of the 10 most profitable Fortune 500 drug companies devoted more of their revenue to profits than to R&D. (see Graph 4)