The pharna industry hitting new heights of audaciousness:
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Medicare Prescription Drug Benefit
Obama's plan to allow the federal government to directly negotiate drug prices for the Medicare prescription drug benefit has left "drugmakers feeling ill," Dow Jones reports. The 2003 legislation that created the drug benefit allows health insurers to negotiate prices with drugmakers. According to Dow Jones, "The industry views the proposal as a frontal assault on sales and profits." According to the Boston Consulting Group <https://exchange.lse.ac.uk/exchweb/bin/redir.asp?URL=http://www.bcg.com/> , such a change could reduce industry revenue by 10%, or about $30 billion. According to Dow Jones, the "indirect impact could be even greater" because such a change could prompt private insurers that offer Part D plans to attempt to negotiate similar prices in their commercial plans. Dow Jones reports that such a change "could deal a big financial blow to companies such as Pfizer <https://exchange.lse.ac.uk/exchweb/bin/redir.asp?URL=http://www.pfizer.com/home/> , Merck <https://exchange.lse.ac.uk/exchweb/bin/redir.asp?URL=http://www.merck.com/> and Wyeth <https://exchange.lse.ac.uk/exchweb/bin/redir.asp?URL=http://www.wyeth.com/> , which are already hard-pressed to sustain historical profit growth rates because of generic competition and stumbles in their own efforts to bring new drugs to market." According to drugmakers, a decrease in revenue would force them to reduce spending on research and development. Billy Tauzin, president and CEO of the Pharmaceutical and Research Manufacturers of America <https://exchange.lse.ac.uk/exchweb/bin/redir.asp?URL=http://www.phrma.org/> , said, "I don't know if they want to declare war like that when there's so much room to work together and so much willingness to work together." However, Tauzin acknowledged that Obama and Congress "could do it -- they've got the votes." Dow Jones reports that if such a change emerges as a top priority for Obama, it could pass early next year and take effect as early as 2010 (Loftus, Dow Jones, 12/2).
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