When it comes to securing their interests against even the flimsiest of threats, the drug-makers’ pockets appear bottomless. A look at last week’s Center for Responsive Politics report on the industry offers an awe-inspiring view of the druggies in action: To begin with, we’re not talking about a handful of lobbyists twisting the arms of members of Congress. Pharma had 1,814 flacks at work last year and 1,309 in the first 3 months of this year. That’s 12 percent of all the lobbyists in Washington. Last year alone the drug industry spent $234 million on lobbying. In the first three months of this year, it spent more than $66.5 million–$1.2 million a day. And that doesn’t include polling, advertising, and research. Among the top recipients of Pharma funds are several members of the Senate Finance Committee, including Chair Max Baucus, who have positioned themselves as a “coalition of the willing” dedicated to promoting a bipartisan middle ground on health care reform–in other words, minor changes that won’t seriously affect private sector profits.
And that’s just what we’re getting from Big Pharma, in the form of a phony “discount” program for Medicare recipients. As I wrote last week, the drug-makers are offering a 50 percent discount–on brand name drugs only–to old and disabled people when they fall into the Part D coverage gap known as the “donut hole.” Pharma’s purported “gift” to seniors, and to the health care reform effort, is actually a smart long-term business strategy, since it is likely to keep Medicare recipients hooked on brand name drugs, rather than switching to less costly generics when they reach the gap.
A study released last year by Wolters Kluwer Health showed “clear evidence of a growing affinity for generics and a continual slide away from brands” since the institution of the Medicare prescription drug program. In 2007, the study found, generics accounted for 67 percent of the Part D market, up from 50 percent just three years earlier. “What’s most striking,” said a VP of the information services company, “is the fact that of those who discontinue their branded drug therapy in the coverage gap, only 6% return to them after leaving the gap.”
In other words, seniors keep taking the cheaper generics, even once the government starts picking up the bill again in the new calendar year. Since most Medicare recipients spend more time outside of the donut hole than in it, the drug-makers could actually see a big payoff from their discount program if it keeps a fair number of elders taking the brand name drugs, and keeps the government—and the taxpayers—funding them.
All this points to the fact that despite their protestations, the drug companies (and insurance companies) have no real objection to health care “reform,” as long as it happens on their terms. The Republican-penned Medicare prescription drug bill, for example, was a huge boon to both industries, opening up a mammoth new market for their products, with the government footing the bill.
What the drug-makers want to avoid, then and now, is an end to what Dean Baker calls “their government-granted monopolies,” which allow them “to charge whatever they want. As a result, we pay nearly twice as much for our prescription drugs as people in countries like Canada and Germany.
By making voluntary “concessions,” the industry positions itself to combat any real change that might affect its profit margins. And with drug spending estimated to total $3.3 trillion over the next decade, $80 billion in discounts is a small price for Big Pharma to pay to preserve its stranglehold on the American health care system. And so is $1.2 million a day to preserve its friends in high places in the United States Congress.