We are being treated to financial system "reform" that is not reform (see prior post, below). Now we are treated to headlines of major "concessions" from another bastion of free enterprise, Big Pharma. The headlines suggested that the populist President had wrenched concessions from Big Pharma to the tune of $80 Billion.
When the CEO of Pfizer, who was then head of the Business Roundtable, was asked on a TV interview a few years ago how he defended the fact that the brand pharmaceutical industry had the highest profit margins of any, he responded to the effect that, gosh, some industry had to have the highest margins, and why shouldn't be us, since we're the good guys, making products that bring such good to mankind.
A response would be- gosh, what about all the taxpayer subsidies for healthcare that allow so many people to allow Pfizer to mark up the price of Lipitor from a production cost of at most 2 cents per pill to a retail cost of over $2 per pill? If GM could have achieved just a tiny fraction of that markup, it would be a paragon of competitiveness.
In that vein, consider the following two headlines and summaries:
For Drug Makers, Concessions Have a Bright Side
Wall Street Journal, Laura Meckler and Alicia Mundy, 06/23/2009
The pharmaceutical industry's agreement to contribute $80 billion over 10 years to a proposed health-care overhaul could yield new business for drug makers, and provide them more certainty about how big a hit they'll take from government cost-cutting. At the White House Monday, President Barack Obama touted the weekend deal between the industry, the White House and a key Senate committee, saying the money would help pay for "overall health care reform.
Federal Saving From Lowering of Drug Prices Is Unclear
New York Times, Robert Pear, 06/23/2009The White House on Monday hailed what it described as a “historic agreement to lower drugs costs” for older Americans, but it was not immediately clear how much the government would reap in savings.
What's true for Big Finance is true for Big Pharma for Team Obama. The more a politician promises change, doing so vaguely but loudly, the more things will remain the same after the victory.
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