Friday, January 21, 2011

UK Plays Hardball With Big Pharma—So Why Can’t America?

In the States, the Republican-controlled Congress is getting ready to repeal the Obama Heathcare Legislation.

In the UK—with their National Health Service—ie., socialized medicine—they are having a different problem. From Bloomberg this morning:
U.K. Health Secretary Andrew Lansley told drug industry representatives that the prices of new medicines would be lower than companies wanted at a meeting weeks after the coalition government took power.
Lansley, a Conservative, “thought it inevitable that there would be some prices the industry therefore wouldn’t like,” according to the minutes of a June 7 meeting with the Association of the British Pharmaceutical Industry. 
In other words, in order to close it’s £156 ($250) billion budget gap, the Conservative government is playing hardball with Big Pharma—

—and why not? No one is remotely surprised when, say, Wal-Mart squeezes its suppliers, in order to deliver to its customers the cheapest products possible. Why shouldn’t the British NHS—the biggest UK customer of drugs and pharmaceuticals—squeeze its suppliers?

So the Conservative UK government is doing the sensible thing: Negotiating with a supplier. 

In the United States, however, it seems as if it were illegal for the government to bargain with a major supplier—most especially Big Pharma. As has been pointed out, the U.S. patient pays twice (or more) for the same drug as a patient in Canada.

Why? Because Big Pharma spends truckloads of money on lobbying—in 2009, they spent north of $100 million on lobbying efforts through their main lobbying group, PhRMA (the Pharmaceuticals Research and Manufacturers’ Association).

One of the main goals of PhRMA during the health care legislation negotiations was to remove the public option, so that the Federal government would not be able to negotiate directly with Big Pharma. Had the public option gone through, the political pressure would have been overwhelming for Big Pharma to lower drug prices.

But that, as we know, didn’t happen. What $100 million in lobbying can buy.

$100 million is a lot of lobbying money—but chump change compared to the stakes in the U.S.: Total health care costs for 2009 were upwards of $2.5 trillion. That’s $8,200 for every man woman and child in the United States. Even a total 2% annual savings would translate into $50 billion—enough to fund the Food Stamps program that helps 14% of the U.S. population.

But why do the sensible thing, huh? Especially when lobbyists are being paid good money to screw the American people.


  1. The real problem that the American people have is that thez are too dump and ignorant so no wonder anz one with some serious dough and good connections can corrupt the szstem, anz szstem democratic-republic or banama republic.

  2. I think somebody corrupted Anonymous' y-z system.

    I think there is a fundamental problem of negotiation with the government in that government has the ability (with guns if necessary but usually by pens) to shut down any business it chooses. While this should make the counter-party more obliging, in the US it works out that the government doesn't negotiate for fear of appearing to use their leverage inappropriately. The only thing worse than a corrupted government is an aggressive government (is the view).

  3. Doug,

    Good point.

    But then this is the same government that has no problem bullying the ever-living daylights of its citizens in every other situation.

    Go figure.



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