The bipartisan Washington, DC “consensus” has so many blind spots, you’d think its exponents lived in a black box. Recently, it has become clear that one of the biggest of those blind spots is the federal government’s treatment of the pharmaceutical industry.
This can be most clearly seen in the troubling continuity between the favored policy of pharma-friendly elements within the Trump administration, and the Obama administration’s own weakness on a critical policy in the battle over drug prices: namely, the 340B drug pricing program.
As granular followers of pharmaceutical policy will already know, 340B is a program passed during the first President Bush’s term, which offers pharmaceutical companies a very simple deal. If they want an ability to sell drugs, price negotiation free, to the giant pot of money that is the Medicaid and Medicare Part B markets, then they have to also sell drugs at lower prices to a specific subset of hospitals that serve a disproportionate share of vulnerable populations, classified as “safety net hospitals.”
To any executive, this should be both a financial and political no-brainer. Financially, the ability to sell to the $57 billion Medicaid and $168 billion Medicare Part B market is so profitable that it easily dwarfs the losses from selling at reduced prices to certain hospitals. Politically, engaging in such voluntary price slashing behavior can engender good will from a grateful public.
However, despite all this, in recent years, this policy has long been in the crosshairs of the pharmaceutical industry. Why? Because (among other things) it limits their ability to price gouge cancer patients, one of the most profitable markets out there. Never mind that cancer drugs are already among the most expensive,…
