What Big Pharma And Mexican Drug Cartels Share

The murderous Mexican drug cartels are known for their viciousness conducting their illicit trade. U.S. drug manufactures are less sanguine but equally adept at protecting their profits.

In anticipation of new health reform legislation that would curb their oligarchy, drug makers have raised their prices about 9% this past year while the Consumer Price Index has fallen by 1.3% during the same period.

The widely acclaimed deal the industry struck with the White House and Senate Finance Committee chairman Max Baucus to shave $80 billion in prices over the next 10 years looks as if someone got snookered. It wasn't Big Pharma.

The industry's rapid price increases on brand names protected by patents are fairly chronicled and explained in an article in today's New York Times.

What the article fails to mention is that an amendment to the senate committee's bill was defeated that would have allowed Medicare to purchase drugs for low-income seniors at the same price that Medicaid pays for the drugs. The Congressional Budget Office estimated it would result in a loss of $106 billion over 10 years to drug makers. That tells you who has the upper hand in this process. It isn't the consumer. The House bill hopes to cut drug prices by $140 billion over the next decade.

The thrust of the price increases is to protect profits required for research and development of new drugs, the Times story quotes industry spokespersons. One of them, Ken Johnson, senior vice president of the industry association — the Pharmaceutical Research and Manufacturers of America — argued medicines create health savings.

"Medicines often reduce unnecessary hospitalization, help avoid costly medical procedures and increase productivity through better prevention and management of chronic diseases,” he said.

Artificially inflating prices is nothing new for Big Pharma. Reports The Times:

A Harvard health economist, Joseph P. Newhouse, said he found a similar pattern of unusual price increases after Congress added drug benefits to Medicare a few years ago, giving tens of millions of older Americans federally subsidized drug insurance. Just as the program was taking effect in 2006, the drug industry raised prices by the widest margin in a half-dozen years.

Don't you love our free market sources at work? It's more civilized than the Mexican drug lords. After all, we consumers are mere peons.