Consumer Watchdog – Drug companies and banks: Bedfellows in abuse

I don't think readers will be too surprised to discover this. Drug companies are jacking up their prices in advance of new laws that might rein in their abuses. Just like credit card interest rates are through the roof, in the high teens for good customers and up to 30% overall, in advance of new regulation.

A New York Times investigation published today shows that drug makers are ratcheting up wholesale prices even as inflation goes negative.

The Times story says:

Even as drug makers promise to support Washington’s health care overhaul by shaving $8 billion a year off the nation’s drug costs after the legislation takes effect, the industry has been raising its prices at the fastest rate in years.

In the last year, the industry has raised the wholesale prices of brand-name prescription drugs by about 9 percent, according to industry analysts. That will add more than $10 billion to the nation’s drug bill, which is on track to exceed $300 billion this year. By at least one analysis, it is the highest annual rate of inflation for drug prices since 1992.

The drug trend is distinctly at odds with the direction of the Consumer Price Index, which has fallen by 1.3 percent in the last year.

So the drug makers' pledge to cut drug prices for seniors by $8 billion a year will actually be a price increase of $2 billion a year, and rising. In exchange for that "promise," the White House promised not to introduce tougher regulation. My favorite quote in the NYT story is from the Merck pharmaceuticals spokespuppet: “Price adjustments for our products have no connection to health care reform.”

Right. If you believe that, you'd buy the argument that banks are raising your credit card rates and shutting down your credit line because the banks (i.e. themselves) are forcing them to. Or that gigantic health insurance conglomerates like United Health Group (the largest supplier of prescription drugs to seniors) are pushing their employees to lobby Congress against health reform because they believe in free speech. Or even that the banks and financiers whose mortgage and energy price manipulations crashed the economy don't need new regulation because they'll promise to control themselves (like a toddler promising not to grab stuff in the supermarket again?).

What also grates me is how the corporate spokespuppets slam groups like Consumer Watchdog when we point out what they're doing (as in all of the above), saying we're just trying to hurt their business, or we're naive.

The latest such statement came from United Health Group, whose spokesman told the Minneapolis Star Tribune (the company's hometown paper),  "I find it somewhat offensive that an outside group is seeking to muzzle our employees." 

He certainly has the location of the muzzle wrong. It belongs on companies that coerce their employees to become corporate ventriloquists' dummies.