Big Pharma’s Phony “Gift” to Seniors

Big Pharma’s proposal to help old people get their meds by giving them a discount when they fall into the “donut hole” in Medicare Part D coverage, is just what we might expect it to be, considering where it comes from: another wolf in sheeps clothing from the drug manufacturers.

President Obama yesterday announced what he called a “historic agreement to lower drug costs” for older Americans, by giving most Medicare beneficiaries a 50 percent discount on brand-name medicines we buy once we have fallen into the coverage gap, which begins once we have accrued $2,700 in drug costs, and doesn’t begin again until the bill comes to $6,100–leaving some of us paying for up to $3,400 in medicines out of  our own pockets. (I fall into the donut hole around August of every year, and never come out of it.)

As the New York Times pointed out this morning, this magnanimous offer won’t really save the government any money, since these are drugs it wouldn’t be paying for anyway. It also won’t hurt the drug companies’ bottom line. As the Times reports:

Charles A. Butler, a pharmaceutical analyst at Barclays Capital, the investment bank, said the drug industry was offering an olive branch to Congress and the White House, in contrast to its “vociferous disagreement” with President Bill Clinton’s proposals in 1993-94.

In an interview, Mr. Butler said he did not think the latest concessions would have “a material adverse impact” on drug company earnings. “Because of the discounts,” he said, “Medicare beneficiaries are likely to continue filling prescriptions in the doughnut hole, whereas in the past many stopped taking their medications because the drugs were unaffordable to them.”

What most initial reporting fails to emphasize is that the agreement only covers brand name drugs, which account for an increasingly small percentage of all prescriptions, despite the pharmaceutical manufacturers’ best efforts to drive consumers toward pricier non-generic alternatives. And that, of course, may well be part of the strategy here. Some oldsters, already struggling with the confusing morass of Part D benefits (which cover various drugs at different rates, which can change at any time) might even ask their doctors to switch them from generics to brand name prescriptions, thinking it might save them money. Then–lo and behold–there will be more, not less, money going into the pockets of Big Pharma.

And there we have it: A move that’s being hailed as a magnanimous concession suddenly looks like nothing more or less than a sales pitch for expensive brand name drugs. Of course, there are no generic equivalents for some brand names and the industry offer may help some people who depend on them. But at the same time, the drug industry is fighting hard against the advent of new generic equivalents.  It even pays off generic manufacturers to stop producing alternatives, to keep them from undercutting brand name monopolies. Obama has expressed a desire to block this practice, which may be another thing that’s in the back of the drug companies’ minds as they plot this strategy.

In the end, of course, this is yet another move in the smoke and mirrors game being played to stop a public option in any health care reform legislation. Why do we need public alternatives when the drugsters already have caved? It is just one more pitched battle in what has become the phony war for health care reform, which now seems to be headed for nothing better than a draw–which means business as usual.

More details are yet to come, but from what we know of it now, the deal stinks. And no wonder, since it was made through the shifty sell-out who’s now the prime engineer of the phony reform, Max Baucus. As the New York Times reports:

The lobby for drug companies, the Pharmaceutical Research and Manufacturers of America, or PhRMA, said it had pledged $80 billion over 10 years to help “reform our troubled health care system.” The commitment came in a deal with the White House and Senator Max Baucus, Democrat of Montana and chairman of the Finance Committee….

But Senate aides and drug company lobbyists said the $80 billion reflected total projected savings to the health care system and included unspecified future concessions, besides the drug discounts in the coverage gap.

Nonetheless, Obama described the agreement as a “significant breakthrough on the road to health care reform.” And that’s always the problem when it comes to corporate wolves in sheeps’ clothing: There are a lot of politicians out there who are just waiting to have the wool be pulled over their eyes.

4 responses to “Big Pharma’s Phony “Gift” to Seniors

  1. Carolyn Caffrey

    You’ ve been reading my mind! Yeah I believe that big Pharma is Santa Claus like I believe the insurance industry puts people before profits.
    By the way, a lot of folks don’t know that the insurance industry is the only industry (besides major league baseball) to be EXEMPT from federal anti-trust laws. And further, there are no federal regulations over the insurance industry. They are regulated by 50 different entities in 50 different states, a lot of them pretty weak. Yeah, I really want for-profit insurance in the center of my health care reform! (Sorry for the digression but I remain a firm supporter of single payer health care for all, and I intend to keep fighting for it!! Physicians for a National Health Plan, (over 16,000 docs and the ones who got arrested at the Senate Finance Hearing) have a great site with lots of information http://www.pnhp.org. I highly recommend it for dispelling some of the well-funded lies being spread.
    Ok, but back to the pharm “philanthropists”. There is another reason their “generosity” applies only to Name Brand pharmaceuticals; a LOT of their “cash cow” drugs are up for patent expiration in the next few years. They stand to lose HUGE money. And quite a number of those are drugs used widely by Medicare patients…like Aricept for Alzheimers. So, they’re trying to cut their losses by discounting ONLY brand name prescriptions as a way of squeezing extra life and dollars from those through the Medicare program. I just completed a little summary of 18 of the top “patent cliff” drugs whose patents expire in the next 3 years. If you can find a good source of current info on the top brand name prescriptions 1) prescribed to the elderly and 2) prescribed through the Medicare Part D program, I’d love to do a little fuller analysis of this. But here is a partial list of top sellers that will be open to generics:

    in 2010: Lipitor (the #1 drug in retail sales with annual sales in 2008 of $5.9 BILLION); Advair, Levaquin, Cozaar, and Aricept.
    In 2011: Seroquel, Zyprexa, Actos, Xalatan, Aprovel, and Plavix (#3 at $3.8 billion);
    In 2012: Lexapro, Avandia, Singulair, Zometa, Diovan, Crestor, and Symbicort.
    Yeah, some gift to the elderly huh. Don’t you know the advertising is going to be fierce too, and targeted, to keep seniors asking for those, and doctors prescribing them.
    I’d be tired…if I wasn’t so DAMN MAD!!

    My final comment: SR676 Single Payer Health Care for All!! Demand that the July 31 deadline be revoked and that town hall meetings be held in home districts during the August Congressional recess!! Let’s ask Congress to return their automatic pay raises from 2oo8 and 2009 to fund the hearings (that totals about $5million right there). Or better yet, as their employer, let’s tell them we can’t afford their Cadillac Congressional Health Insurance Policies, and they’ll either have to pay for their own (and buy it anonymously) or we’ll sign them up for an HMO of our choosing.

    Oh yeah, and JUST SAY NO…to brand name drugs.

    Thanks for letting me vent! And keep up the GREAT work! Love your articles.

    ps. “It will be a great day when there is health care for all, and AIG has to put up tip jars in the corner stores to ask for a bailout” (my update of a ’60’s antiwar poster)

  2. George Fulmore

    This article is pretty much in line with the following letter to the editor I mailed recently:

    Dear Editor:
    In response to the announcement that the pharmaceutical industry would chip in $80 billion over the next ten years “improving Medicare drug benefits for seniors,” I have my doubts. The way the Medicare Part D program works today is that the drug companies charge top dollar for their drugs via the program, with seniors being shielded from the real costs, for the most part, until they reach the “donut hole.” This occurs at about $2,750 of the total to-date cost for drugs for the year. And it is then that the senior must pay the full retail value for the drugs, not just the co-pay paid before the “donut hole.” This is the point where the drug companies appear to be saying they would charge about half of their retail value for their drugs, until the total to-date cost reaches about $5,000. (At this point, the federal government, under Part D, begins to pay 95% of the total cost of the drugs to the end of the year, while the senior goes back to paying a minimal co-pay.)
    The reality is that Medicare Part D was always a scam that primarily benefitted the drug companies and the insurance companies, under the “compassionate conservative” umbrella. American seniors, for the most part, reaped minimal benefits, if at all. And the real losers, of course, have been and will continue to be the U.S. taxpayers, with the federal subsidy for Part D having been estimated to be between $700 and $800 billion over ten years.
    So, when the drug companies tell us that they are going to play a significant role in health care reform, I think we have a right to be skeptical. In fact, I think it would probably be better to reevaluate and possibly scrap Medicare Part D altogether. We could use some of that $700 billion subsidy in more useful ways under a system of universal health reform.

  3. For many years I hated those big drug companies. Now I loved them. My wife became disabled a fews years back. She was and still is on a lot of medication. I did not who to turn to when she got her first SSI check because that check shut our state run insurance off. Then one day I saw Montel Williams on tv and yes for the past year we get her brand name drugs for free and will continue to get them when part b come in next year for those this will not cover them.What I do not understand is when I look for help in this life changing process called medicare, it scares me. We will have to figure what we may not afford for her to take anymore. Now when she does indeed stop one of her meds it will cause a problem then I may have to take her to a hosp. That may cost the insurance companies 10s if not hundreds of thousands of dollars. Makes no sense to me and if those that work in the insurance industry think it does tells me they at one time worked for the federal goverment. How is what they do think this is cost effective I have no idea.

  4. Pingback: Big Pharma Is the Big Winner in Health Care Reform « Unsilent Generation

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