White House Health Proposal May Blow Up PhRMA Deal — Making Government Transparent and Accountable - Sunlight Foundation Blog

White House Health Proposal May Blow Up PhRMA Deal — Making Government Transparent and Accountable - Sunlight Foundation Blog
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Throughout 2009, PhRMA and major pharmaceutical companies crafted a deal with the White House to limit cost cutting by the industry in exchange for the industry’s support, through over $100 million in television advertising, for health care reform. (The entire story behind the crafting of the deal can be read here.) The White House’s new proposal contains deeper cost cuts than previously agreed to and contains regulations on the relationship between brand-name and generic drug companies that the industry opposes.
The White House’s new proposal would eliminate the “donut hole” by 2020 by making participants pay only 25 percent coinsurance with Medicare covering the other 75 percent. The White House also takes a page from the House health reform bill by providing a $250 rebate to Part D participants who fall into the “donut hole.” (The House bill provides for a $500 reduction in costs for participants who fall into the “donut hole.”)

Another piece of the proposal would allow the Federal Trade Commission (FTC) to regulate the interactions between brand-name and generic drug companies. At issue is the revelation that brand-name drug companies have been paying off generic drug companies for support on patent extensions for certain drugs. This means that consumers will see serious delays in the release of certain generic drugs and therefore still face the higher costs of brand-name drugs. The FTC is filing suit against the drug companies to end this practice and the White House proposal aims to give the FTC authority to regulate and end this practice. The summary of the proposal states that the White House would, “[make] anti-competitive and unlawful any agreement in which a generic drug manufacturer receives anything of value from a brand-name drug manufacturer that contains a provision in which the generic drug manufacturer agrees to limit or forego research, development, marketing, manufacturing or sales of the generic drug.” The White House claims that payouts to generic drug companies cost consumers up to $35 billion over the next ten years.

PhRMA and the brand-name drug companies backing it are adamantly opposed to FTC regulation of payouts to generic companies. A previous statement from PhRMA states:

Patent settlements between brand-name and generics companies can resolve expensive patent disputes to help foster innovation and improve access to medicines so that patients can live healthier, more productive lives. ...