Tag Archives: drug companies

Drugsters Back on Top in Latest Health Care Reform Deal

What the press refers to as “tweaks” in the new version of health care legislation would appear to hand Big Pharma a sizeable victory, allowing the companies to extend life times of brand name drugs by selling them at discounted prices within the Medicare drug plan.

The latest deal is once again being portrayed as a magnanimous gesture by the profitable pharmaceutical makers–and to help the poor guys out a little and lessen the strain on their stockholders’s pocketbooks, the government apparently will come in to pay the companies some of the dough they lose in providing discounts. To put it another way, it looks like the discounts aren’t really discounts at all. In the world of Congressional smoke and mirrors, they miraculously become a subsidy.

Government policy ought  to push less expensive generic drugs into the marketplace. Mandating their preferred use by Medicare would be one small step in that direction. Generally speaking, the brand name drugs should be eliminated when their patents run out. The proposed legislation apparently will have the effect of lengthening the drug companies’  monopoly on certain drugs, thereby assuring higher, not lower prices.

Although somewhat confusing, an article in yesterday’s New York Times has details on the latest deal. And I’ve written before on how discounts are transformed into profits for Big Pharma–see the following posts:

Big Pharma’s Phony “Gift” to Seniors

More on the Pharma Con Job

 Bottom line: cost control is sacrificed to market monopoly

Big Pharma’s Skyrocketing Prices

The AP reported yesterday on a new Government Accountability Office (GAO) report on soaring drug prices:

Prices on a growing number of prescription medications have ballooned in recent years as consolidation in the drug industry leaves fewer companies manufacturing niche medications.

Congressional investigators say the number of extraordinary price hikes on drugs doubled between 2000 and 2008. The drugs affected are mostly specialty medications but also include some popular products like Bayer’s antibiotic Cipro and the Eli Lilly schizophrenia treatment Zyprexa.

The Government Accountability Office report issued Monday attributed the rise to a combination of factors, including industry consolidation and price hikes by third-party providers who repackage drugs for patients.

The GAO’s findings could put new pressure on drugmakers to contribute billions more to the health care reform effort being finalized by Congressional Democrats.

The drug industry originally pledged $80 billion to defray the costs of covering millions more Americans, but the package being negotiated between the House and Senate is expected to call for well over $100 billion in financing from drug companies.

GAO found more than 400 examples of unusual price jumps on brand name drugs during the eight-year period — most ranged from 100 to 499 percent, but several exceeded 1,000 percent.

Unsurprisingly, the drug industry lobby Pharmaceutical Research and Manufacturers of America (PhRMA) “says the requested investigation is based on misleading data.”

What I’m waiting to see is whether these findings actually do inspire the Democrats to “put new pressure on drugmakers to contribute billions more to health care.” As I’ve written before, Big Pharma’s $80 billion “gift” to health care reform is a Trojan horse. And measures that might actually cut into their still-wide profit margin–like government price controls–are weak in the House’s bill, and absent altogether from the Senate’s.


Most people old enough to remember the intricate details of the Watergate scandal are rapidly approaching geezerhood, if they aren’t established geezers already. (If you were an adult when Nixon resigned, you’re over 50 now.) So readers of Unsilent Generation may be interested in a story posted recently by my colleague at Mother Jones, David Corn.

The Rose Mary Stretch

The Rose Mary Stretch

It seems that a former NSA staffer and amateur historian thinks he has found a way to recover some of the infamous 18-minute gap in the Watergate tapes, in which the president and his chief of staff, Bob Haldeman, discuss the recent break-in by their team of dirty tricksters at the Democratic National Committee’s Watergate offices.  This gap was discovered when Nixon finally released the tapes, after resisting for months (and firing half of his own Justice Department over the issue in the Saturday Night Massacre). Nixon’s loyal secretary, Rose Mary Woods, later said that she had inadvertantly erased part of the tape by stepping on a pedal while she reached over to answer the phone–a move so unwieldy and implausible that it came to be know as the “Rose Mary Stretch.”

All this cloak-and-daggering in the Oval Office might seem pretty amusing, 35 years after Nixon boarded his plane back to San Clemente–if only history hadn’t repeated itself so many times. There’s a reason why the recent film Frost/Nixon wasn’t seen as simply an overblown tale of two has-beens trying to redeem themselves. When Nixon says, in one of his interviews, “When the president does it, that means that it is not illegal,” he could be expressing the credo of the Bush/Cheney White House.  In fact, some of Tricky Dick Cheney’s sinister machinations make Watergate look tame by comparison: Nixon, after all, was mostly just trying to get re-elected, not toss out the Constitution and take over the world.

Things may have gotten better since January 20, 2009. But as John Nichols pointed out in the Nation last week, we’re still a long, long way from the executive branch transparency Obama promised in his campaign. In particular, the Obama White House’s clandestine deals with Big Pharma and other health care industry representatives are starting to sound a lot like Dick Cheney’s secret sessions with oil companies to set energy policy–maybe not quite as bad, but bad enough. And as Nichols puts it, “bad-but-not-quite-Cheney-bad is an unacceptable standard.”

The Health Care Reform That Wasn’t

Confused about what’s happening with health care reform? Join the club. After months of buildup and debate, endless meetings and daily pronouncements, we’re still waiting some clear outline of a reform plan to emerge. Instead, the picture seems to get fuzzier with every passing day.

At the American Medical Association convention in Chicago this afternoon, the President called health care expenditures a “ticking time bomb” for the nation, and told eloquent stories of families, small businesses, and even doctors who are being crushed by these spiraling costs. The rest of his speech catalogued the most uncontroversial elements of any proposed reform–encouraging more preventative care, promoting “best practices,” eliminating waste, reducing junk food consumption, instituting electronic medical records. Who could possibly object to such things, other than perhaps the manufacturers of potato chips and Wite-out?

Meanwhile, the speech offered only the vaguest clues as to how Obama proposes to resolve the most contentious—and important—issues in any possible reform plan. The best insight into this ongoing state of irresolution came after a meeting last Wednesday at the White House, where the President called together a group of senators from both parties to hash out their differences. The Associated Press reported:

A senior Republican who recently criticized Obama also sounded positive. “The president, I thought, was very flexible except on one thing, and that was getting it done,” said Sen. Chuck Grassley, R-Iowa. “When the president is flexible on controversial things … I think that that’s good news.”

Given all this “flexibility,” the senators at the meeting—Grassley and Max Baucus (D-Mont.), ranking members of the all-important Senate Finance Committee, plus HELP Committee leaders Mike Enzi (R-Wy.) and Chris Dodd (D-CT), who has stepped up in Ted Kennedy’s absence—agreed they could bring a bill to the Senate floor in July.

In other words, expediency has replaced essence when it comes to the Obama administration’s position on health care reform, and strategy has replaced substance. What matters is not so much what kind of health care system we end up with, as long as we end up with something that looks like reform—preferably, before the end of Obama’s first year in office. What this is, of course, is the perfect formula for a health care reform that is uncontroversial, weak, and expensive.

What is shaping up here is a replay of the credit card legislation: Under a propaganda blitz heralding sweeping reform, we get legislation that reins in some of the very worst abuses, while making no significant change at all to the underlying flawed system. So, for example, we may see insurance companies required to provide coverage in spite of pre-existing conditions–something Obama referred to in his AMA speech, with moving references to his mother’s own battle with cancer. We might see what the President today called “more efficient purchasing of prescription drugs,” which presumably means more power to haggle with Big Pharma over drug costs, as well as speeding up approval of generics. We will see health care providers given incentives for more cost-effectiv–and, we can hope, better–treatment. These things are not meaningless, and they will provide a modicum of help to some struggling Americans. But they do virtually nothing to strike at the basic American system of health care for profit. And at the same time, they offer only a fraction of the savings a single-payer system could offer.

With no clear vision emanating from the White House and no bottom line, everything is up for grabs when it comes to the details of this tepid reform. It’s no wonder, then, that new balls keep coming out of left field every day. As Obama prepared for his AMA speech, the Washington scuttlebutt was that he would seek to reduce costs by accepting limitations on malpractice suits. In the speech, the President said he was “not advocating caps on malpractice awards,” but wanted to “explore a range of ideas” to reduce the malpractice threat. The New York Times reported this morning:

In closed-door talks, Mr. Obama has been making the case that reducing malpractice lawsuits—a goal of many doctors and Republicans—can help drive down health care costs, and should be considered as part of any health care overhaul, according to lawmakers of both parties, as well as A.M.A. officials.

It is a position that could hurt Mr. Obama with the left wing of his party and with trial lawyers who are major donors to Democratic campaigns. But one Democrat close to the president said Mr. Obama, who wants health legislation to have broad support, views addressing medical liability issues as a “credibility builder”—in effect, a bargaining chip that might keep doctors and, more important, Republicans, at the negotiating table.

It’s in this same spirit of seeking “broad support” that the so-called public option–a government-run alternative to private insurance, which could at least have begun to show up the insurance companies for the bloodsucking middlemen they really are–seems to be dying a slow and painful death. In fact, it looks more and more like the public plan may have all along been a straw man, set up only to be knocked down. On the one hand, it has served as a temporary panacea to single-payer advocates and other critics of medicine-for-profit, including important Democratic constituencies like labor unions. On the other hand, it is now a major bargaining chip, or “credibility builder”–something that the administration can give up, in what looks like a generous concession to its opponents.

TOMORROW ON UNSILENT GENERATION: What the not-so-public “public option” could look like.

Will Obama Fall for the Health Care Industry’s PR Stunt?

In a much-anticipated statement today, Barack Obama announced what is largely a public relations end-run by the health care industry, designed to trim a few scraps off of the nation’s porcine health care budget, while preserving its basic system of medicine for profit.

In a letter to Obama that was released over the weekend, executives from the Advanced Medical Technology Association (the medical device manufacturers lobbying group), the American Hospital Association, the American Medical Association, America’s Health Insurance Plans, and the Pharmaceutical Research and Manufacturers of America, as well as the Service Employees International Union, pleged to “do our part” to reduce health care costs. Their vague, pie-in-the sky promise amounts to just a 1.5 percent reduction in the growth rate of health care spending. Such is the explosion in health care costs that even this miniscule reduction represents a potential $2 trillion saving over 10 years. But there’s no guarantee this figure will be achieved. As the Washington Post points out:

The groups did not spell out yesterday how they plan to reach such a target, and…they offer only a broad pledge, not an outright commitment….In addition, White House officials said, there is no mechanism to ensure that the groups live up to their offer, only the implicit threat of public embarrassment.

“Public embarrassment”? By Big Pharma and the health insurance companies–two of the most shameless industries in the history of corporate capitalism? In any case, even if the $2 trillion reduction is achieved, it clearly won’t come out of industry profits. The Post reports:

Signers of the letter said that large amounts could be saved by aggressive efforts to prevent obesity, coordinate care, manage chronic illnesses and curtail unnecessary tests and procedures; by standardizing insurance claim forms; and by increasing the use of information technology, like electronic medical records.

So let’s get this straight: Saving all this money depends on getting Americans to eat less? Good luck with that one. And the other brilliant cost-saving measures involve getting doctors to create computer records of all the overpriced drugs they prescribe to patients, and giving patients easier forms to fill out before they get turned down six times by their private insurance companies?

Do you see a pattern here? None of these changes would make a dent in the industry’s bottom line–and what’s more, they could even enhance profits, by encouraging government-funded programs to help private companies streamline their bloated bureaucracy (much of which would instantly become superfluous under a public, single-payer system). The letter to Obama suggested this when it said: “We are committed to taking action in private-public partnership to create a more stable and sustainable health care system.” As we all know by now, “private-public partnership” usually means public investment for private profit.

It all adds up to a brilliant move, when you think about it. It makes the private health care companies look cooperative and proactive, rather than like the greedy obstructionists they really are. It gets these companies on the inside track with the administration, and creates common cause with the unions. In particular, it establishes a solid place at the table for the health insurance industry, the blood-sucking middlemen who ought to be kicked out of the health care system altogether. 

And what might the industry get in return for this generous “cooperation”? The Kaiser Daily Health Policy report today rounded up the possibilities:

The [Wall Street] Journal reports that although the groups did not ask for anything in return for the pledge, many of the factions are looking to prevent regulations that could “pose new burdens” or affect their profitability. For example, the health insurance industry is seeking to offset any reductions to their payments by obtaining new rules that would require all U.S. residents to have health coverage, according to the  Journal. The Journal reports that health insurers have made several concessions intended to prevent a public option — which they fear could affect their profitability — as part of reform legislation (Wall Street Journal, 5/11). According to the AP/Philadelphia Inquirer, drugmakers are hoping to avoid a requirement that new drugs pass a cost-benefit test before receiving regulatory approval. In addition, hospitals and physicians are looking to avoid a system in which the government would dictate their payments for all patients, not just those under Medicare or Medicaid (Alonso-Zaldivar, AP/Philadelphia Inquirer, 5/11).

In other words, the underlying purpose of this PR stunt is to slow or block any meaningful health care reform, which could actually improve care while reducing the price tag by a lot more than 1.5 percent. These include regulating the cost of pharmaceuticals and medical devices, curtailing or eliminating the role of the insurance companies, or introducing single-payer, which allows other developed countries to deliver superior health care for 20 to 40 percent less–all of which make $2 trillion in weight-loss programs and paperwork reduction measures look pretty pitiful by comparison.

All we can hope for is the possibility, remote as it may be, that Obama himself is also playing a PR game–making nice with the industry shills while planning some kind of genuine reform that will hit them in the only place it counts, and the only place where really meaningful savings reside: their profit margins.

Big Pharma Profits from Grandmother’s Little Helpers

The Kaiser Daily Health Policy Report today summarizes two new studies from the journal Health Affairs, documenting the explosion in the use–and cost–of psychotropic drugs over the last decade. One study found that between 1996 and 2006, “prescriptions for mental health medications increased by 73% among U.S. adults and by 50% among children.”  As of 2006, one in 10 U.S. adults takes at least one prescription for this purpose.

I’ve written before about the growth of antidepressant use among the over-65 crowd (myself included), which seems to be the new way to deal with what a drag it is getting old. But the new study also finds dramatic growth in the use of other medications: “The study found that the number of U.S. seniors receiving psychotropic medications, including dementia and antipsychotic drugs, doubled during that time period.”

This points, in particular, to the increasing treatment of older people with cognitive loss, and any kind of agitated or unruly behavior, as “psychotic.” It’s impossible to know for sure, but I suspect this has something to do with the fact that the drug companies have been pushing their lucrative psychiatric medications on this vulnerable population–the most notorious (and illegal) example being Lilly’s campaign to urge doctors to prescribe the antipsychotic drug Zyprexa for off-label use on elderly patients with dementia.

Unsurprisingly, the second study published in Health Affairs documents a steep rise in spending for mental health care during the same ten-year period–more than 30%, with “nearly all of the increase caused by psychiatric drug costs.” Big Pharma reaps even more rewards from mental health than from other medical fields: “Drugs accounted for 51% of mental health care costs in 2006, while drugs accounted for 26% of spending for all other health care costs, according to national data.” The Kaiser article makes note of the trend toward “greater reliance of the use of psychiatric drugs compared with other forms of psychosocial treatments such as therapist visits.”

This is especially bad news for old timers, since the weakest link in their health coverage isn’t psychotherapy–which Medicare covers pretty generously–but prescription drugs. This is due to the inadequate Medicare Part D program, which was designed to benefit drug and insurance companies at the expense of beneficiaries (and taxpayers). And it turns out that elders with mental health issues get particularly screwed by Part D: A recent study found that on average, we will fall into the infamous “donut hole”–the gap where all coverage for prescriptions ceases–two months earlier than others.

Several reports issued since the recession began have shown that older people simply stop filling some of their prescriptions when they can’t afford them. So what’s going to happen when all us geezers who have come to depend on Big Pharma’s little helpers stop taking our meds?

Drug Store Cowboys

News reports are touting Obama’s determination to advance health care reform, regardless of Republican resistance. But developments taking place behind the public debate tell quite another story, and show the usual suspects–the drug companies and the insurance industry–hard at work to advance their own interests.

Consider, for example, last week’s AARP study showing that Big Pharma has been increasing the prices of the brand name drugs most often prescribed to older Americans at well beyond the rate of inflation. According to an AP account of the report, AARP “said that prices manufacturers charged for the most widely used brand name drugs rose 8.7 percent in 2008, higher than in years past. The general inflation rate in 2008 was 3.8 percent.”

Perhaps the drug companies are acting out of sheer greed in a deep recession. Perhaps they know that patents are running out, and want to make as much as possible before the plug gets pulled. Or perhaps the drugsters sense impending change and want to rake in the cash before Congress pulls the plug.

In any case, they offer, as some sort of consolation prize, the fact that generic drug prices are falling. Of course, thanks to the generous patents handed out to Big Pharma even for lifesaving drugs, generics do not exist for many prescriptions. And there is another problem: generic equivalents sometimes turn out not to be equivalent, after all. An increasing body of evidence shows that small differences in their chemical makeup, which are allowed by law, can affect the way they work. So many patients are left with no other choice than to shell out for the brand names.

A second troubling development in the area of prescription drugs arises out of the continuing scams run by private Medicare Advantage plans. Now the pharmacists are getting cut into the act. By hooking up with insurance companies running Medicare Advantage plans, pharmacists get to charge consultant fees for telling people which drugs to take, and how, and when, and even for “making recommendations to physicians”–especially if the drugs they recommend happen to be cheaper.

The Kaiser Daily Health Policy Report, citing reporting by the Tennessean newspaper, notes that “pharmacies’ income typically comes from adding an additional fee to the price of medications. However, as profit margins decline, consultations are becoming another way for pharmacists to bring in additional revenue.” Here’s how it works, according to rules established by the Center for Medicare Services (CMS), the government agency that oversees the program:

Under existing CMS guidelines, insurers that offer Medicare Advantage plans are required to pay pharmacies for the meetings with patients, during which they discuss the importance of taking the proper medications at the appropriate times….Some pharmacists now earn up to $160 for a one-hour meeting with patients….

In 2010, new CMS guidelines will broaden the pharmacy consultation benefit to more MA beneficiaries. Under the revised guidelines, MA plans will be required to review their member rolls on a quarterly basis to identify eligible members for the program. In addition, health plans will be prohibited from restricting access to the benefit to members with a high number of chronic health conditions and medications….

The idea of the friendly neighborhood druggist watching out for local elders might seem appealing on the surface. But these days, of course, its mostly faceless chain stores that provide medications to Medicare recipients. And these drug stores are are being given something like a backdoor license to practice medicine, doing work that doctors ought to be doing–at a much cheaper price.

Controlling cost, after all, is what it’s all about, rather than the benign task of ensuring that oldsters “take the proper medications at the appropriate times.” As Kaiser reports, “Pharmacists will be paid $50 to review a beneficiary’s medications and make recommendations to their physician. Pharmacists will receive additional payments if they recommend a less-costly, therapeutic equivalent to the patient.”

It occurs to me that these two bits of news show the pharmaceutical industry and insurance industry working at cross purposes:  While the drug companies are doing everything they can to profit off of costly brand name drugs, the insurance companies are coming up with new strategies for moving patients to less expensive alternatives.  Maybe we should just step back and let the two industries fight each other to the death, to the vast benefit of the American health care system.