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UPDATED: BMS Had $400M Motive to Use Healthcare Town Hall Rioters

Bristol-Myers Squibb had a $400 million motive to retain DLA Piper, the lobbying firm that installed* employs Dick Armey, who is chairman of FreedomWorks, one of the groups behind the near-riots at healthcare town hall debates across the U.S.: The company makes that much in "windfall" payments under the Medicare Part D prescription drug coverage benefit, according to a 2008 report from the U.S. House committee on Oversight and Government Reform.

UPDATE: BMS retained DLA Piper in 2008 but not in 2009, according to the CRP's lobbying database. The company said:

The law firm, DLA Piper, is among the law firms retained by Bristol-Myers Squibb. However, Bristol-Myers Squibb has never retained Dick Armey. Further, Bristol-Myers Squibb has no connection whatsoever with an organization called Freedom Works.
When Medicare Part D was reformed in 2006 to provide a new prescription drug benefit, that benefit included a provision that essentially bans Medicare from negotiating drug prices with the companies supplying them. Instead, private health insurers negotiate those prices for Medicare. The result was that drug prices paid by Medicare rose faster and higher than prices paid by Medicaid, the report says.

Those price premiums were a windfall for industry profits, and BMS was one of the largest beneficiaries, the report notes. Under proposals supported by Democrats in Congress, Medicare would be able to negotiate its own prices, and that windfall would go away. The report states:

There are 29 large drug manufacturers who produce the 100 drugs used most often by dual eligible beneficiaries. In total, these manufacturers received $3.7 billion more from the Medicare Part D insurers in 2006 and 2007 than they would have received if the dual eligible beneficiaries had obtained the drugs through Medicaid.
Johnson & Johnson received the largest windfall: $615 million in 2006 and 2007, including over $500 million in additional revenue from sales of just one drug, the anti-psychotic Risperdal. Bristol-Myers Squib [sic] received a windfall of $400 million, including over $200 million in additional revenue from sales of its heart-attack and stroke medication Plavix. Over 13 drug manufacturers had windfall revenues of over $100 million in 2006 and 2007 as a result of the switch in coverage for the dual eligible beneficiaries.
Mystery solved!

Who else benefited? The report provides this handy chart:

* DLA Piper denies it "installed" or controls FreedomWorks.

Image by Flickr user borman818, CC.

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