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Did drug makers really stand up to Trump over those 'Trump card' discounts? Doubtful

By Michael Hiltzik, Los Angeles Times on

Published in Business News

Few industries have a harder time securing positive PR than America's drug makers. So you should take with a heap of salt the recent report about how they took a moral stand against President Trump.

According to the report in the New York Times the industry was on the verge of agreeing to reduce consumer drug costs by $150 billion until the Trump White House went a step too far.

The White House, it says, insisted that the industry pay for $100 cash discount cards to be mailed to Medicare enrollees ahead of the November election.

But the drug companies, sensitive as they are to the enduring principles of democracy, weren't about to lend their credibility to a shabby partisan stunt. That's their story, anyway.

"We could not agree to the Administration's plan to issue one-time savings cards right before a presidential election," Priscilla VanderVeer, spokeswoman for the drug industry lobby Phrma, told me by email. Some were even labeling the savings cards "Trump cards."

Should you buy this narrative? Probably not.

 

Kevin Drum of Mother Jones, who is second to none among economic commentators in deconstructing suspect math in official declarations, subjected the report to painstaking analysis and makes a compelling case that too much of it fails to pass the smell test.

As Drum points out, the Times description of this supposed agreement is rather murky. It doesn't specify, for example, the period over which the $150 billion in savings was to occur. If the savings were to take place in a year, that would be more than twice the industry's estimated annual profits in the U.S., which generally fall in the neighborhood of $60 billion.

Would Big Pharma really eradicate more than two years of U.S. profits just to make a deal with Trump? Doubtful. And why, he asks, would the industry balk at a Rose Garden event celebrating the $100 discount cards, which would come to $6 billion if all 60 million Medicare enrollees used them, but not balk at a ceremony celebrating a $150-billion deal?

"A Rose Garden event sounds pretty good!" Drum writes. "Does anyone really believe that it was because they were squeamish about helping the president shortly before an election? That doesn't seem much like the pharma industry we all know and hate, does it?"

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