It astonishes me that current and future Medicare beneficiaries are raising concerns about future legislation: in the absence of reform, these programs will fail!

The Medicare Part A program (the hospital insurance program) runs out of money in just a few years. There is no statutory authority to fund this program without new legislation: it is entirely unclear how the program functions once the trust fund is exhausted.

The Medicare Part B program (outpatient and physician services, primarily) is not going to run out of money (it is funded via beneficiary premiums and federal tax revenues). But, written into statute are draconian cuts to physician reimbursements. If allowed to occur, many physicians will opt out of the program, leading to dramatically reduced access. Thus, the program will begin failing our Medicare beneficiaries unless there is legislative change.

Only the Medicare Part D program (the prescription drug benefit) faces no immediate challenge.

Medicare is at great risk in the absence of reform. It is beyond the scope of this posting to offer real solutions, but clearly we need to communicate with the public about how the reform effort will make Medicare more secure, not less.

It was encouraging to see the pharmaceutical industry's $80 billion voluntary reduction of prescription drug expenses over ten years. We know that health reform needs an upfront investment and it was good to see big pharma chipping in.

That said, I have two concerns. First, this is a voluntary agreement made behind closed doors with few details available to the public. Voluntary commitments are easily forgotten or overturned. It's also not clear what was promised in exchange for the concession from pharma.

My second concern is that we will start to look for more such voluntary concessions as a path to paying for reform. If we really want to reduce costs now and in the long term, we will not succeed by asking stakeholders to donate their profits. We will need to structure our health-care system to allocate value properly.

Where we put our money is the most clear indication of what we value. If we pay for procedures, tests, and patient visits (as we do in our current system), then we will get more procedures, test, and patient visits. This does not always mean better, higher-quality health care -- it just means more health care. The only thing more health care guarantees is higher cost. Furthermore, as any patient or physician can attest, more health care comes with its own risk of complications. For example, spending more time in a hospital puts people at higher risk of developing clots. Having unnecessary CT scans can expose patients to the risk of radiation and the potentially toxic effects of contrast agents.

What we really need to do is pay for what we value: good outcomes and patient satisfaction. If we do this, there's reason to believe we will generate better outcomes and satisfaction.

Figuring out how to design and implement a system that reward quality over quantity is a monumental challenge. It will require restructuring primary care, implementing payment reform, enhancing prevention and wellness programs and integrating non-physician care providers more effectively just to name a few essential components. But the rewards will be tremendous -- higher-quality health care at lower cost. Lower cost results in part from earlier detection and treatment, greater efficiency in the delivery system, and decreased utilization of services that don't improve the quality of care.

Before we can do any of this, we must summon the political will to pass a comprehensive health reform bill. Many stakeholders are wary of reform and of what they may lose in a restructured health-care system. But the most important stakeholders of all -- patients -- are struggling under the yoke of high costs, poor access and undependable quality. We owe it to them to begin this reform process with a strong health reform bill in 2009.

The medicine men are coming to town and they have something to sell. Grab grandma and the kiddies; be sure to take your wallet because the medicine men are selling their usual "tonic." They'll have banjos, tambourines and fiddles and the music will be lively as they fiddle you into stepping to their tune. They're here to entertain you.  They will show you some new tricks, as well as some old tricks, 'cause they're very versatile. Everyone in town will turn out to see the tricks, hear the speeches and hopefully, be entertained. The question is, will there be anything new or will it all be a redo of the old do? Some of the speeches are going to be ugly so you'd better hide the kids or cover their innocent little ears as the talk turns to tragedy, loss and suffering. They will describe the evils of the flesh and the suffering throughout the land, all the while encouraging you to buy their patent medicine. It's new. It's good for you. It will cure everything that ails you. 

That was the way it used to be as needy individuals laid down their 25 cents for a bottle of magic, a balm for all their problems and all the answers to life. Unfortunately, that's still going on today as the pharmaceutical companies back up their truck to all full-service clinics, mental health and outpatient clinics and doctor's offices.  Let me share one scenario with you: My husband, who is the only public health nurse at our local county jail, sees a daily assortment of felons, addicts, drunks and often, the mentally ill. They all have an assortment of medications they have received, very often as samples from one of the local clinics.  Many of the drugs are outrageously expensive. For instance, the antipsychotic drug Seroquel costs $900 per month when dispensed at the maximum dose. These patients can't afford those expensive drugs when they are out of jail so they get samples; when in jail, if those drugs are given, our small, poor county could take the hit.  I ask you, what is the difference between these samples and the free "hit" given by the drug pusher on the corner who is recruiting users? The ads on television and every magazine are costly and definitely directed toward the consumer, not the doctor. How many doctors are sitting in their waiting rooms reading those magazines?  They're too busy dealing with the patients streaming into the physicians offices stating, "I want this drug." It's legal, it's ridiculous and it's lucrative.

The recent offer of the drug companies to cover the doughnut hole of the already very inadequate Medicare part D coverage is a tiny first step. At least it's for the seniors who have worked in our country for years, are here legally and deserve to live lives free of despair in their final years. It's just a token when you compare it to the ads, the samples and all the new drugs that are being cranked out every time one of "theirs" goes generic. Bring in the research department, add or switch around a molecule or two and voila! You've got a "brand new" drug. It's difficult to keep track of all the cholesterol-lowering statin drugs that are on the market, as well as all the proton pump inhibitors.

Yes, indeed, if you plunk down your 25 cents and pick up your bottle of elixir, all of your problems will disappear; then if you embrace each aspect of the President's health plan, you will never again have a care in the world. If you buy that, I have a bridge I can sell you, but alas, you won't have any money left to buy a bridge or anything else.

The announcement that drugmakers will offer 50 percent discounts to Medicare beneficiaries who fall into the Medicare Part D doughnut hole is excellent news for seniors. Drugmakers will help to bridge the gap in coverage that forces roughly 15 percent of seniors stop buying medications when their annual prescription drug bill reaches $2700.

But this is, as President Obama said, "a first step." Pharma is going to have to do more.

Look at it this way: this year, prescription drug sales in the U.S. will total $252 billion. http://www.marketresearchbulletin.com/?p=47 (Pundits often say that spending on drugs accounts for just 10 percent of the $1.6 trillion we, as a nation, lay out for health care. But that figure includes only the medication that you and I buy retail, at the pharmacy. Add in the drugs that are administered in hospitals, and in doctors' offices and Pharma's slice of the pie is much larger.)

Meanwhile, if sales continue to rise--and drug-makers continue to hike prices -- spending on drugs is expected to double between 2014 and 2018. By 2019, Pharma hopes to rake in over $500 billion in U.S. sales.

In that context, giving up $80 billion over ten years is not a huge sacrifice. Pretend that the $80 billion is spread out evenly, $8 billion a year. This means that in 2019, instead of showing revenues of $500 billion, the industry would have to make do with $492 billion.

But unless the GDP doubles, we cannot afford to spend $492 billion on drugs in 2019. Why does Pharma charge U.S. patients sky-high prices? Because it can. No one is pushing back. In other countries governments negotiate to protect dying patients from being gouged.

Meanwhile, Pharma is spending twice as much on marketing and advertising as it does on research. Perhaps it should re-think that spending -- and pricing. Either that, or prepare to negotiate. Together, Medicare and a public sector insurer should be able to make drugs as affordable as they are in France.

The work by the Pharmaceutical Research and Manufacturers of America (PhRMA) and Medicare to address the Medicare Part D "doughnut hole" coverage gap is a positive step to improve coverage and accessibility of necessary drugs for Medicare beneficiaries. However, the steps taken are a form of voluntary price controls, and we have learned over the past 25 years in Medicare that price controls do not result in controlled spending, so this is not a long-term solution.

Real long-term success in reducing costs in all of health care will come through delivering the right care to the right people at the right time, using the best science and medical judgment available and shared decision making with patients -- in other words, delivering higher quality, safer health care (including pharmaceuticals) at a lower cost.

To achieve this transformation and to gain agreement among providers and other health care stakeholders to participate, they must have the right incentives. Medicare and other government-run insurance programs should be reformed so that they pay for value -- improved patient outcomes and decreased waste. Today's government-run programs pay the most to providers who use the most resources, regardless of their outcomes. This is hardly an incentive to reduce cost, and those doctors, nurses and hospitals that provide care at lower cost are punished under the current system.

As a practicing primary care physician (internal medicine), I think it is great that the pharmaceutical industry is addressing the cost of health-care reform in our country. Previous efforts to address the pharmaceutical needs of seniors (via the Medicare prescription drug benefit) fell woefully short of what was needed. Personally, I'd like to see the cost of medications become a non-issue for seniors and all patients. No one should have to chose between eating, paying an electric bill or mortgage and taking their medications at the effective dosage. Everyone knows that taking a little bit of one's medication is like "being a little pregnant:" either you are or you aren't; either you do or you don't!

The naysayers that clamor about whether the pharmaceutical companies, AARP, Republicans or Democrats could have done something more along this vein back in 2006 versus now are clearly not thinking about the team effort it is going to take to get significant health-care reform now in 2009. What was not done in 2006 or in years past to bring us to this point is not what is important here. What is important now is that we need all sectors of our great nation to come together to move health-care reform forward.

It seems alarmingly premature for government to be striking deals with drug companies about what they are willing to contribute to health-care reform. Truthfully, through discounts over the next 10 years, they are simply providing relief for a problem that should be eliminated through innovation and negotiation. I can't help but think about the late night call I received from a woman who was in tears about the $1,800 prescription cost for her husband who was in the doughnut hole of his Medicare. He required these drugs after surgery to remove infected bone from a diabetic wound in his foot. Her doctor tried to help by finding a less costly and far inferior drug for him to take in the interim.

These discounts may have benefited this couple, but what about all the other Americans who will suffer the impact of absorbing the costs? Perhaps a more prudent move by the government would have been to wait for a better deal that would benefit all Americans once a more concrete health insurance plan was in place. This move simply guarantees that drug companies can limit regulation and have a voice in health-care reform. Compromising with big business about any facet of health care will in no way reduce costs in the final assessment.

More sobering is the thought that government instead of leading drug cost reform has given the reigns to a runaway horse.

It's deja vu all over again: the prescription drug industry's "give back" feels very much like the tactic adopted in the the Clinton reform era when drug prices moderated. Then, the not-so-invisible hand of the market motivated the industry to lower the rate of price increases as the threat of price controls loomed.

Now, the motivational threat is the repeal of the "non-interference" clause in the Medicare Part D law. A repeal would allow the federal government to negotiate prices with drug companies the way other nations do in other parts of the world. For now, negotiations occur only in the private sector.

Discounting and give-backs may be a practical short-term tactic, but the real challenge is how life science companies will bring value to patients and clinicians -- and how to price based on true value.

Imagine living with the devastating diagnosis of HIV/AIDS. Then imagine that the price tag of your monthly antiviral medications quickly exhausts your Medicare prescription coverage and leaves you living life in the gap. Not only must you wage an aggressive offensive to safeguard and manage your health, but also you are left naked to bear the brunt of the financial cost of the disease. Living life in the balance, wedged between necessity and cost, sadly has placed good health at too high a price for some of the most vulnerable among us. For many, the pang of the health-care crunch is felt not at the doctor's office but when paying for prescription medicines.

In the above scenario, after signing up for Medicare Part D in January, the elderly patient's prescription coverage had been devoured by February, leaving the patient to purchase pricey antiviral drugs out of pocket, or, worse, out of retirement savings. Only after spending thousands of dollars and consuming personal funds previously allotted to stay afloat did Medicare kick back in and offer much-needed assistance. This is but one story out of the many seniors who exist in the Medicare coverage gap. Unfortunately, too many Americans face desperate choices in what has become a health-care system replete with ironies.

Given these realities on the ground, Monday's announcement by the White House that drug manufacturers will extend $80 billion over the next decade to soften the blow to the nation's pocketbook (by discounting prescription drugs to seniors and the disabled), serves as a welcome down payment of sorts on health-care reform. Though not a guarantee, the deal is a genuine start by the pharmaceutical industry, in what is becoming a piecemeal approach to tackle the trillion-dollar gorilla in the room.

Buy-in from drug companies is necessary, long overdue and the least the highly-profitable pharmaceutical sector can offer the American public. Still, the question looms: why not make the pledge without any precondition on passage of health-care legislation? Does this give "big pharma" wiggle room, a convenient out if Congress fails to reciprocate its gesture? Or does this move create incentive for the cast of decision makers-- insurance companies, legislators and the American Medical Association included --- to budge from their respective perches? The jury is still out. However, I am heartened that a health care stalemate which seemed prematurely scripted a few days earlier is thawing and that policymakers once again are being held to task to employ strategy to capitalize on public will.

We must choose to look upon those nameless and faceless lives lived in the balance. As Obama stated earlier this month, we have "a moral and economic imperative" to act and show resolve. And we must commit to heart that empathy is not the enemy of reason.

The widely publicized pledge by the Pharmaceutical Research and Manufacturers of America (PhRMA) is welcome news--but only as a beginning, not an end.

The proposed $80 billion in savings over 10 years is not enormous when put into perspective. According to a Health Affairs journal article that breaks down 2007 U.S. health-care expenditures, this country spends $230 billion annually for prescription drugs, with 20 percent paid by Medicare. The annual growth of these costs has averaged 6 percent, with even higher increases for Medicare. As baby boomers age, these drug expenditures will climb. It's a sure bet -- and PhRMA knows it.

American taxpayers and employers must pick up this growing tab. Unlike other countries, our government does not use its purchasing power to reduce Medicare pharmacy prices. My Detroit patients can cross the bridge into Canada and enjoy a substantial discount for most medications. This is because our friends to the north negotiate "hard-ball" with drug companies. This is the outcome that PhRMA fears will happen in the U.S.

The pharmaceutical companies have contributed mightily to improving health around the world and deserve our thanks. They have also been rewarded with large profits, the majority of which are earned in the U.S. Like all sound businesses, they have recognized the opportunity and seized it. This has been good for their shareholders--but not so good for U.S health-care costs.

While PhRMA's latest offering sounds attractive, it is a placebo for a more fundamental and politically tough issue. Americans need the pharmaceutical industry--but they do not need prescription drugs priced more expensively than anywhere else in the world.

The big question is whether our government will use its considerable purchasing power to cure this problem--or be satisfied with a sugar pill.