Thursday, April 19, 2007

Republicans Protect Drug Company Profits!

Earlier this week Republican Senators blocked a proposal to let the federal government negotiate lower drug prices for millions of older Americans, a practice now forbidden by law. That's right- it is against the law for the United States government to use its leverage to secure lower prices for medicare subscribers despite the fact that government pays 60% of total health care costs!

The legislation would have saved senior citizens $30 billion a year.

Republican Senators argued that private companies can do a better job than the government of obtaining cost savings and that allowing Medicare to negotiate lower drug prices would constitute interference with the free market!

Their commitment to unfettered markets was nowhere to be found when pharmaceutical companies were spending hundreds of millions of dollars on lobbyists whose job it was to get Congress to pass Medicare legislation (the heavy hand of government) that created Part D restricting buyers' (Medicare's) market power.

Perhaps a review of the Senators campaign contributions would shed light on their ideological inconsistencies.

Paul Krugman recently reviewed the legislation's impact:

"The 2003 Medicare legislation created Part D, the drug benefit for seniors — but unlike the rest of Medicare, Part D isn’t provided directly by the government. Instead, you can get it only through a private drug plan, provided by an insurance company. At the same time, the bill sharply increased payments to Medicare Advantage plans, which also funnel Medicare funds through insurance companies.

As a result, Medicare — originally a system in which the government paid people’s medical bills — is becoming, instead, a system in which the government pays the insurance industry to provide coverage. And a lot of the money never makes it to the people Medicare is supposed to help.

In the case of the drug benefit, the private drug plans add an extra, costly layer of bureaucracy. Worse yet, they have much less ability to bargain for lower drug prices than government programs like Medicaid and the Veterans Health Administration. Reasonable estimates suggest that if Congress had eliminated the middlemen, it could have created a much better drug plan — one without the notorious “doughnut hole,” the gap in coverage once your annual expenses exceed $2,400 per year — at no higher cost.

Meanwhile, those Medicare Advantage plans cost taxpayers 12 percent more per recipient than standard Medicare. In the next five years that subsidy will cost more than $50 billion — about what it would cost to provide all children in America with health insurance. Some of that $50 billion will be passed on to seniors in extra benefits, but a lot of it will go to overhead, marketing expenses and profits."

Coincidentally, this week Merck, Schering-Plough, Wyeth, Johnson & Johnson, Abbott Laboratories and Eli Lilly announced that strong drug sales led to quarterly profits that topped Wall Street expectations, adding, according to the New York Times," to the wave of good news for investors in major pharmaceutical companies."

Republicans have forgotten that the obligation of public officials is to promote the public interest. They consistently use their offices to promote narrow private interests of oil, gas, mining, and pharmaceutical companies.

The founding fathers understood the corrosive impact of narrow business interests on democracy. The noted American historian, Gordon Wood, observed they believed that..."in a republic no person should be allowed to exploit the public authority for private gain. Indeed several states wrote into their revolutionary constitutions declarations against any man or group of men receiving special privileges from the community. 'Government 'said the New Hampshire Constitution, 'was instituted for common benefits, protection, and security of the whole community, and not for the private interests ...of any one man, family or class of men.'"

Benjamin Franklin, who became a public official after his retirement, thought there was no greater insult than to say someone thought like a shopkeeper.

How things have changed! Now candidates and public officials boast about being shopkeepers citing their "real world experience." This can only mean that the rest of us work in the surreal world!

This vote was a victory for the pharmaceutical industry which spent hundreds of millions of dollars to ensure that America’s senior citizens continue paying the highest drug prices in the world. Private interests trumped the public good.

The 2003 legislation should be renamed the pharmaceutical windfall profits protection plan!


julillywk said...
This comment has been removed by the author.
julillywk said...

This is why the Administratin would not allow Wisonconin's Eldercare to continue: the camparison of a plan that covered more people for less money exposed the sweethear fat in their plan. WHEN will they be held to account for this piracy?

Michael Rosen said...

You are correct. The Republicans under the guise of privatization subsidize profiteers (and campaign contributors)from insurance to college loan companies. It appears that Congress is beginning to demand accountability. Let's hope so!