On my way to work today I heard a story on NPR’s Morning Edition about some deals that the Obama administration and Washington in general is trying to hammer out with major health companies, in particular with PhRMA (pronounced “pharma”), aimed at bringing down health care costs.

A woman with psoriatic arthritis was interviewed briefly to discuss the amazing, improving effect that biologics have had on her condition, all the while draining her health benefits dry every year, down to the last cent.  The name of the biologic she is taking wasn’t mentioned, but she said that each prescription refill costs about $2,000, which is expensive.  But, without it, she wouldn’t be able to walk.   I suspect that the biologic she is taking is Humira.

The point of the story was to juxtapose the amazing benefits of these new “wonder drugs” with the astronomical cost they incur for research and development.  Of course, this cost is eventually passed on to the patient (or the insurance company who picks up the tab).

Such extreme cost make these drugs harder to come by, especially for those with less than stellar health insurance.  In light of this dilemma the Obama administration and other forces in Washington have attempted to strike a deal with major drug companies that is supposed to bring down the cost of health care over the next 10 years by 2 trillion dollars.   I say “supposed to” because this depends on drug companies voluntarily not making as much profit as they otherwise could.  In return for their kindhearted generosity, the government will extend these companies’ exclusive rights to sell expensive biotech drugs (like the one mentioned above) by another 12 years.  This means that there won’t be any less expensive, generic versions of the drugs to compete, thus keeping the cost as high as possible for the next 12 years.

The problem here is that, if drug companies are smart enough to invent space-age biotech drugs, then they’re probably smart enough to do basic financial planning that would leave them coming out on top over the next 10-12 years.   One can only imagine how much they plan on making if they are willing to concede 2 trillion dollars.