$2.3 Billion Settlement From Pfizer
Say what you will about the Obama Administration, but they did manage to squeeze $2.3 billion out of Pfizer for violating FDA regulations. The investigation occurred mainly during the Bush Administration, but let's just say I'm less confident that a follow-through like this would actually occur. And with the President engaging in backroom deals with industry to keep their guns silent on health care reform, it comes at an opportune time.
“It’s another step in the administration’s ongoing effort to prosecute any individual or organization that tries to rip off health care consumers and the federal government,” said Kathleen Sebelius, secretary of health and human services.
Republicans and Democrats on Capitol Hill have accused the Obama administration of failing to crack down adequately on health care fraud, arguing that huge savings in government health programs could be found with better enforcement. The settlement had been expected. Pfizer, which is acquiring a rival, Wyeth, reported in January that it had taken a $2.3 billion charge to resolve claims involving Bextra and other drugs. It was Pfizer’s fourth settlement over illegal marketing activities since 2002.
“Among the factors we considered in calibrating this severe punishment was Pfizer’s recidivism,” said Michael K. Loucks, acting United States attorney for the Massachusetts district.
For context, the $80 billion in savings negotiated over 10 years from the pharmaceutical industry would translate to $8 billion annually, so the White House picked up 1/4 of the annual savings just from this settlement (not that it would be applied, I'm just adding for context).
I don't think the Big Pharma deal is worth it and will cost consumers in the long run. But a commitment to actual regulations might force the drugmakers into compliance, and provide even more savings at the high end.
Of course, if we start actually regulating drug companies or work to cut into their record profits, we'll stifle their innovation and ruin their made-up market share:
Atlantic blogger Megan McArdle wrote a post on pharmaceutical companies last month, and while replying to one of her commenters, she said this:
The United States currently provides something like 80-90% of the profits on new drugs and medical devices. Perhaps you think you can slash profits 80% with no effect on the behavior of the companies that make these products. I don't.
Last week, during a Washington Post online chat, this exchange took place:
Anonymous: You said that medical innovation will be wiped out if we have a type of national health care, because European drug companies get 80% of their revenue from Americans. Where did you get this statistic?
Megan McArdle: It wasn't a statistic--it was a hypothetical.
You'd think McMegan would agree to resign at this point.