Tag Archives: Pharmaceutical Research and Manufacturers of America

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.

More on Congress’s Addiction to the Drug Lobby

The Washington Post this morning prints an lengthy article and elaborate chart showing the numbers of drug lobbyists at work on the health reform legislation. This list includes a little congress in itself of former aides and members that only lots and lots of money could buy.

The nation’s largest insurers, hospitals and medical groups have hired more than 350 former government staff members and retired members of Congress in hopes of influencing their old bosses and colleagues, according to an analysis of lobbying disclosures and other records.

The tactic is so widespread that three of every four major health-care firms have at least one former insider on their lobbying payrolls, according to The Washington Post’s analysis. Nearly half of the insiders previously worked for the key committees and lawmakers….

The hirings are part of a record-breaking influence campaign by the health-care industry, which is spending more than $1.4 million a day on lobbying in the current fight, according to disclosure records. And even in a city where lobbying is a part of life, the scale of the effort has drawn attention. For example, the Pharmaceutical Research and Manufacturers of America (PhRMA) doubled its spending to nearly $7 million in the first quarter of 2009, followed by Pfizer, with more than $6 million.

Valuable as this information is, you have to wonder whether the paper would have published any of this without Politico’s expose of publisher Katherine Weymouth‘s audacious plan to hold a salon where, in exchange for fees running as high as $250,000, from the lobbyists, she would bring the paper’s reporters, key administration sources, and other notables to her home for a private confab on health care—like a little closed committee session, if you will, where the Post could facilitate Obama’s reform on industry’s terms. Once the plan was made public Weymouth cancelled the salon and apologized.

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.