The nation's top pharmaceutical companies have crowed a lot lately about their agreement with the Obama administration to issue selective price rebates worth $8 billion a year over the next 10 years to help the administration trim drug costs under the proposed health care reform legislation. More quietly, however, the pharmaceutical industry has rapidly increased drug prices by around 9 percent over the past year through September, producing higher earnings more than three times the value of their ballyhooed give-back. What a deal -- for the drug companies.

Their price hikes represent the highest annual rate of increases in America's drug prices since 1992. The higher cost will drive the nation's annual spending on prescription drugs to more than $300 billion this year. It also will position the industry to reap enormously more money if a reform bill passes that adds some 30 million newly insured customers to pharmacies' customer base.

A study by Stephen W. Schondelmeyer, a pharmaceutical economics professor at the University of Minnesota, found that drug prices generally were raised by most big companies around 9 percent, and that the most popular brand-name drugs used by Medicare patients rose by 9.3 percent in the last year, The New York Times reported Monday. His study coincided with a similar analysis of company earnings by a top Wall Street stock analyst, The Times said.

The price increases will be paid by patients everywhere. The pharmaceutical industry's selected rebates, by contrast, would go rather narrowly to needy senior citizens and to particular Medicare initiatives.

The increases are already taking a significant bite out of consumers' monthly budgets, and will continue to do so in coming years. For an average popular brand name drug, the price jump could easily add $200 a year to a patient's annual cost of a single prescription drug taken daily. Considering the vast number of Americans who must take several prescription drugs daily for chronic conditions, the higher prices are especially onerous.

Pharmaceutical company representatives contend the increases are necessary to accelerate research and development for new drugs as patents expire for successful existing drugs, leaving them to compete with much cheaper generics. That argument has a major hole in it: Name-brand drugs account for 78 percent of total prescription drug spending, and drug companies are now spending more on advertising their top drugs than on research and development.

Critics reasonably content that Big Pharma's defense of their stunning price increases is best seen as a shell game to mine larger profits in the future and to cash in before health reform changes are made. The price hikes also would counter the annual $14 billion in drug spending reductions that the proposed House health reform bill aims to achieve.

Certainly we've seen this pattern of drug company increases before. When Congress passed the Medicare prescription drug benefit program in 2003, drug companies sharply ratcheted up their drug prices before the program could be implemented. The latest round of excessive prices increases are the largest since then.

Big Pharma's new price gouging should prompt the administration to stop coddling the drug makers and throw its support to the House reform proposals aimed at the drug industry. The House bill would nearly double the level of rebates the White House has extracted. It also would allow Health and Human Service officials to negotiate with drug companies for Medicare and for a new public insurance plan, if one is adopted.

Such negotiated prices could take a cue from similar negotiations in all other industrialized countries, which typically pay one-third to one-half the American prices for the same brand drugs. Private insurers would also gain clout to bargain for similarly reduced drug prices. The cumulative effect would force drug companies to spread out their R&D costs abroad, providing Americans far fairer and lower prices.

Given the need to reduce health care spending in every area, it's time to get drug companies in the fair-pricing loop as a central part of the health-care reform movement.