Back Room Health Care Reform Deals?...We're Shocked!...

Here's a newsy tidbit from the New York Times:

"Pressed by industry lobbyists, White House officials on Wednesday assured drug makers that the Administration stood by a behind-the-scenes deal to block any Congressional effort to extract cost savings from them beyond an agreed-upon $80 billion.

"Drug industry lobbyists reacted with alarm this week to a House health care overhaul measure that would allow government to negotiate drug prices and demand additional rebates from drug manufacturers.

In response, the industry successfully demanded that the White House explicitly acknowledge for the first time that it had committed to protect drug makers from bearing further costs in the overhaul. The Obama Administration had never spelled out the details of the agreement."

The Administration apparently made the deal in order to get one of the major stakeholders in the health care reform debate (in addition to hospitals, physicians, insurance companies and, well, us) to the negotiating table. The other groups have continued to talk, but (supposedly) haven't made any specific offers or received any special consideration.

That we know of. Yet...

The provision of the Bush Administration's Medicare Part D prescription drug legislation which prohibited Medicare from negotiating prices with pharmaceutical makers essentially requires Medicare (the largest single "customer" in American health care) to pay retail prices for all prescription drugs.

It made no sense at the time. Insurers negotiate discounts with drug makers. So do big companies, through the pharmacy benefits managers that work for them. Prohibiting Medicare from acting like a customer was just a straight-up taxpayer subsidy to drug makers.

And given that prescription costs comprise about 12 percent of health care spending, freeing Medicare and other government agencies to negotiate volume discounts on prescription drugs would seem to be a sensible step in "bending the curve" in health care spending.

The White House's agreement in egregious in three ways: it deliberately undercuts legislative efforts to curb Federal health spending sufficiently to make a difference in costs (Congressional leaders were apparently unaware of the deal); it suggests that there's a LOT more fat in prescription drug prices which could be trimmed, but Big Pharma's White House deal ostensibly limits the industry's downside to a fraction of what could be achieved through tough negotiations; and it leaves one wondering what OTHER deals might have been struck which will make the Administration's health care reform efforts less effective.

After all, we don't know who else has been assured of a walk, even with all the sturm und drang the White House has unleashed in the country about the need for an open and inclusive health care reform strategy.

We know insurers haven't agreed to make any specific concessions. Is that why the President and Congress have amped up the volume of their criticisms of the industry?