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In Health Overhaul, Drug Lobby Prevails
Chalk one up for the pharmaceutical lobby.
The U.S. drug industry fended off price curbs and other hefty restrictions in President Barack Obama's health care law even as it prepares for plenty of new business when an estimated 32 million uninsured Americans gain health coverage.
To be sure, the law also levies taxes and imposes other costs on pharmaceutical companies, leaving its final impact on the industry's bottom line uncertain. A recent analysis by Goldman Sachs, the Wall Street firm, suggests the overhaul could mean "a manageable hit" of tens of billions of dollars over the coming decade while bolstering the value of drug-company stocks. Others expect profits, not losses, of the same magnitude.
Either way, pharmaceutical lobbyists won new federal policies they coveted and set a trajectory for long-term industry growth. Privately, several of them say their biggest triumph was heading off Democrats led by Rep. Henry Waxman, D-Calif., who wanted even more money from their industry to finance the health care system's expansion.
"Pharma came out of this better than anyone else," said Ramsey Baghdadi, a Washington health policy analyst who projects a $30 billion, 10-year net gain for the industry. "I don't see how they could have done much better."
Costly brand-name biotech drugs won 12 years of protection against cheaper generic competitors, a boon for products that comprise 15 percent of pharmaceutical sales. The industry will have to provide 50 percent discounts beginning next year to Medicare beneficiaries in the "doughnut hole" gap in pharmaceutical coverage, but those price cuts plus gradually rising federal subsidies will mean more elderly people will purchase more drugs.
Lobbyists beat back proposals to allow importation of low-cost medicines and to have Medicare negotiate drug prices with companies. They also defeated efforts to require more industry rebates for the 9 million beneficiaries of both Medicare and Medicaid, and to bar brand-name drugmakers' payments to generic companies to delay the marketing of competitor products.
The impressive list of wins is testament to a carefully planned and well-financed lobbying strategy, led by Pharmaceutical Research and Manufacturers of America, the industry's deep-pocketed trade group.
The trade group has been led by Billy Tauzin, whose $4.5 million in earnings in 2008, the most recent figure available, underscore the high stakes for the industry.
The former Louisiana congressman will quit his post in June - a decision he abruptly announced in February when it seemed the health bill would die. Some industry officials said at the time that Tauzin was forced out, which the trade group denied.
As Obama's health care drive began last year, drugmakers agreed with Senate Finance Committee Chairman Max Baucus, D-Mont., and White House officials to support the effort. In exchange, the companies volunteered $80 billion in 10-year savings for the health care changes, and backed it up with an expensive TV ad campaign pushing Obama's proposal.
It is unclear precisely how much drug manufacturers ended up contributing, in part because much of the savings - like discounts to seniors - come off prices the companies themselves set. Their biggest expenses over the decade are estimated to include over $20 billion for an expanded rebate for medicines used by Medicaid, $28 billion for a new fee on drug firms and about $30 billion for closing the "doughnut hole."
In a March 21 newsletter, the financial services firm Morgan Stanley estimated a $95 billion, 10-year price tag, offset by tens of billions the companies would gain from extra customers and other provisions. Industry critics say the cost will be lower because of firms' control of prices, and will be more than outweighed by added sales.
Yet even the worst-case scenario - a net cost of tens of billions - would be small for a U.S. drug industry that IMS Health, a medical data firm, calculates earns more than $300 billion a year.
"Let's put it this way: They can afford it," said Tim Chiang, a pharmaceutical analyst in Stamford, Conn.
Drugmakers gained an eleventh-hour win when lawmakers decided against expanding drug discounts to some hospitals serving low-income patients, a proposal some feared could cost tens of billions. The overhaul law that Obama signed Tuesday would have broadened those discounts to inpatients, but the companion bill revising the earlier measure largely pulled that back.
Senate Finance Committee Chairman Baucus, said in an interview last week that as a trade-off for rolling back that expansion, the drug industry agreed to provide an additional $10 billion over a decade to help close the gap in Medicare coverage.
As for what Democrats gained from their ally, the industry and coalitions it joined spent about $67 million on supportive TV ads since the beginning of 2009, according to Evan Tracey, president of Kantar CMAG, which tracks political ads. That made it one of the biggest players in an airwaves battle that saw all sides spend $220 million.
Pharmaceutical interests spent $188 million lobbying last year, more than all but a handful of industry sectors, according to the nonpartisan Center for Responsive Politics. They employed an army of 1,105 lobbyists.
And after years of funneling most of its campaign contributions to Republicans, the industry has favored Democrats with 56 percent of the $5 million it has handed candidates so far this year. The biggest recipient, by far, of the industry's 2008 election cycle contributions of $13.8 million was Obama, who received $1.2 million for his presidential campaign.
"They're certainly going to get a very high return on that investment," Waxman said in a recent interview.
© 2010 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The U.S. drug industry fended off price curbs and other hefty restrictions in President Barack Obama's health care law even as it prepares for plenty of new business when an estimated 32 million uninsured Americans gain health coverage.
To be sure, the law also levies taxes and imposes other costs on pharmaceutical companies, leaving its final impact on the industry's bottom line uncertain. A recent analysis by Goldman Sachs, the Wall Street firm, suggests the overhaul could mean "a manageable hit" of tens of billions of dollars over the coming decade while bolstering the value of drug-company stocks. Others expect profits, not losses, of the same magnitude.
Either way, pharmaceutical lobbyists won new federal policies they coveted and set a trajectory for long-term industry growth. Privately, several of them say their biggest triumph was heading off Democrats led by Rep. Henry Waxman, D-Calif., who wanted even more money from their industry to finance the health care system's expansion.
"Pharma came out of this better than anyone else," said Ramsey Baghdadi, a Washington health policy analyst who projects a $30 billion, 10-year net gain for the industry. "I don't see how they could have done much better."
Costly brand-name biotech drugs won 12 years of protection against cheaper generic competitors, a boon for products that comprise 15 percent of pharmaceutical sales. The industry will have to provide 50 percent discounts beginning next year to Medicare beneficiaries in the "doughnut hole" gap in pharmaceutical coverage, but those price cuts plus gradually rising federal subsidies will mean more elderly people will purchase more drugs.
Lobbyists beat back proposals to allow importation of low-cost medicines and to have Medicare negotiate drug prices with companies. They also defeated efforts to require more industry rebates for the 9 million beneficiaries of both Medicare and Medicaid, and to bar brand-name drugmakers' payments to generic companies to delay the marketing of competitor products.
The impressive list of wins is testament to a carefully planned and well-financed lobbying strategy, led by Pharmaceutical Research and Manufacturers of America, the industry's deep-pocketed trade group.
The trade group has been led by Billy Tauzin, whose $4.5 million in earnings in 2008, the most recent figure available, underscore the high stakes for the industry.
The former Louisiana congressman will quit his post in June - a decision he abruptly announced in February when it seemed the health bill would die. Some industry officials said at the time that Tauzin was forced out, which the trade group denied.
As Obama's health care drive began last year, drugmakers agreed with Senate Finance Committee Chairman Max Baucus, D-Mont., and White House officials to support the effort. In exchange, the companies volunteered $80 billion in 10-year savings for the health care changes, and backed it up with an expensive TV ad campaign pushing Obama's proposal.
It is unclear precisely how much drug manufacturers ended up contributing, in part because much of the savings - like discounts to seniors - come off prices the companies themselves set. Their biggest expenses over the decade are estimated to include over $20 billion for an expanded rebate for medicines used by Medicaid, $28 billion for a new fee on drug firms and about $30 billion for closing the "doughnut hole."
In a March 21 newsletter, the financial services firm Morgan Stanley estimated a $95 billion, 10-year price tag, offset by tens of billions the companies would gain from extra customers and other provisions. Industry critics say the cost will be lower because of firms' control of prices, and will be more than outweighed by added sales.
Yet even the worst-case scenario - a net cost of tens of billions - would be small for a U.S. drug industry that IMS Health, a medical data firm, calculates earns more than $300 billion a year.
"Let's put it this way: They can afford it," said Tim Chiang, a pharmaceutical analyst in Stamford, Conn.
Drugmakers gained an eleventh-hour win when lawmakers decided against expanding drug discounts to some hospitals serving low-income patients, a proposal some feared could cost tens of billions. The overhaul law that Obama signed Tuesday would have broadened those discounts to inpatients, but the companion bill revising the earlier measure largely pulled that back.
Senate Finance Committee Chairman Baucus, said in an interview last week that as a trade-off for rolling back that expansion, the drug industry agreed to provide an additional $10 billion over a decade to help close the gap in Medicare coverage.
As for what Democrats gained from their ally, the industry and coalitions it joined spent about $67 million on supportive TV ads since the beginning of 2009, according to Evan Tracey, president of Kantar CMAG, which tracks political ads. That made it one of the biggest players in an airwaves battle that saw all sides spend $220 million.
Pharmaceutical interests spent $188 million lobbying last year, more than all but a handful of industry sectors, according to the nonpartisan Center for Responsive Politics. They employed an army of 1,105 lobbyists.
And after years of funneling most of its campaign contributions to Republicans, the industry has favored Democrats with 56 percent of the $5 million it has handed candidates so far this year. The biggest recipient, by far, of the industry's 2008 election cycle contributions of $13.8 million was Obama, who received $1.2 million for his presidential campaign.
"They're certainly going to get a very high return on that investment," Waxman said in a recent interview.
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i thought our lord and savior said there was no place for lobbyists in politics. didn't he vow that they wouldn't be involved in his administration or in matters of policy. just another broken promise.
The working poor, who had no health care insurance, will be covered in the future. This is good, but consider the following:
The middle class will see:
1) Their state and federal taxes go up ? including Medicare taxes
2) Their private insurance premiums go up
Seniors will see:
1) $500 billion less in Medicare
2) Fewer doctors willing to accept Medicare patients
States will see:
1) Federal government expansion of Medicaid ? adding financial burden on the states
2) This action forces the states to greatly raise taxes on citizens of each state
Businesses will see:
1) Federal mandates which force them to provide insurance ? adding financial burdens
2) This action will cause many to have to lay off more workers
The majority of Americans:
1) Asked for reform on a few specific areas ? but will see health care turned upside down
2) Have been ignored, after stating in polls that they do not want this bill
The federal government will see:
1) Itself much more empowered over individuals and businesses
2) Additional deficit spending after the CBO scores the impact of the reconciliation bill
Americans were asking Washington to help bring down the cost of health care, but instead Washington took this as an opportunity to fatten itself at our expense. This bill will cause premiums to go up dramatically, and the higher taxes will result in our standard of living going down. Washington turned a deaf ear to the majority of Americans, and we will have an opportunity to set things straight come November.
Your comments shows little understanding of the health care industry today.
Consider the following -extremely common- scenario. A 55 year old man goes to his doctors for a checkup. While there the nurse practicioner takes his blood pressure and notes on the chart that it is high. His doctor comes in and tells him he is fine and hands him a prescription for high blood pressure medicine and walks out - taking all of 10 minutes.
For the next 30 years, he takes blood pressure medicine. Every once in a while he goes to his doctor where a nurse practitioner takes his blood pressure. Most of the time he wears a portable blood pressure bracelet on his wrist and monitors his own blood pressure.
He lives to age 85 doing this. If he hadn't, he would have died at 65.
Now, who exactly gave him his extra 20 years of life? His doctor who was just reading off his chart? His doctors nurse practicioner who spent 5 minutes taking his blood pressure? Or Big Pharma, who for 30 years manufactured every tablet he took with rigid quality control, using very expensive to maintain equipment, in precise dosages?
There's no question that some doctors are lifesavers. But, a modern doctor can't do his job without Big Pharma. However, Big Pharma gets along fine without doctors for a HUGE number of over-the-counter medications.
This is why we are letting the drug companies "do whatever" Because espically for chronic problems that people have, Big Pharma is really doing all of the work of keeping people healthy, NOT the doctors, and NOT the insurance companies.
One of these days we are gonna have computerized diagnostic gear that is so advanced that people will be able to use it without a doctor. Read the Harry Harrison SF books about the "medkit" Watch Star Trek and see the emergency medical hologram. For that matter, watch Clone Wars and they have an emergency medical hologram too. All of that is going to come in the next couple hundred years sometime. Doctors will be relegated to surgery and suchlike, and diagnostics for mundane stuff will be done by people, on themselves, with computer-assisted diagnostic gear. All of the work of curing people will be Big Pharma.
15 years ago I had cancer. I'll always remember the one time I asked my oncologist how he determined the dosages and treatment of the chemo that cured me. His response was that "all of that is determined by a set regimen that has been already worked out" In other words, he didn't know how the chemo drugs worked that cured me, (not specifically, but only in a general way) he didn't know HOW to determine the correct dosage without use of the chemo drug makers charts, all he knew was that if you see this kind of cancer, there's these 3 different regimens that you can attack it with, and you just pick the one that's designed for the type of patient that you have, and follow it.
I was really more cured by the work done by the drug companies that manufactured my chemo drugs. All my oncologist did was know what the correct recipie was to pick, but Big Pharma was the one that did the cooking. And the cooking is a lot more complex and hard to do right, than determining the menu.
It's illegal to bring them back accross the border.