Industry criticises Obama’s call for cheaper drugs

The US pharmaceutical industry hit back against Barack Obama’s deficit reduction plan, warning that his proposals would stymie medical advances and hurt drug companies. One top executive said the president’s speech raised fundamental questions about the industry’s outlook in the US.

The reaction signalled that a de facto truce established between the powerful drug industry and the White House during negotiations to pass healthcare legislation last year was officially over.

Mr Obama said in a speech on Wednesday that the “purchasing power” of Medicare, the government-sponsored insurance programme for the elderly, should be used to cut prescription drug spending and accelerate the introduction of cheaper generic brands on to the market.

The remark – just one sentence in an hour-long speech that focused on deficit reduction – sounded like fighting talk to the pharmaceutical industry, which supported Mr Obama’s healthcare initiative last year.

“Unfortunately, the president’s approach to reducing our deficit fails to consider the impact on the entire policy tapestry – local and federal – that influence our industry’s current and future health,” said John Castellani, chairman of Phrma, the industry trade group. “Specifically, proposals to expand rebates, saddle seniors with higher premiums and slash data protection for biologics are bad for patients and are bad for innovation.”

Phrma said plans to impose “price controls” would slow the pace of drug innovation and spending on research and development and that better drugs would reduce hospitalisations and lower healthcare costs.

Drug companies took Mr Obama’s comments as a threat to the “non-interference” clause in the Medicare drug scheme, which restricts the government from manipulating prices in the industry.

David Brennan, chief executive of AstraZeneca, told CNBC television on Thursday that he was optimistic about the US pharmaceutical market until Mr Obama’s speech.

“Some of the comments that were made yesterday don’t really provide the kind of policy framework for integration there that we’re looking for, so we’re just more concerned about it,” he said.

As part of a deal agreed behind closed doors in 2010, industry negotiators agreed to offer $80bn in drug discounts to elderly patients and actively lobbied for the healthcare overhaul. In exchange, proposals supported by some Democrats that would have dented the industry’s profits were taken off the tahttp://www.blogger.com/img/blank.gifble.

The White House has already faced a tough political opponent in the insurance industry, which steadfastly lobbied against the healthcare bill. The possibility that it could now also face similar pushback from Big Pharma raises further political challenges for the administration.

Mr Obama’s proposal also called for strengthening the Independent Payment Advisory Board, which was created during last year’s reform act to curb Medicare spending growth, and banning brand-name drug companies from making so-called “pay for delay” deals with generic companies to keep their products off the market. The plan estimates savings of $200bn over 10 years.

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