The current debate in the US Congress about the how the Medicare (government single-payer insurance for the elderly and disabled) program pays for pharmaceuticals has brought out some interesting contrasts and contradictions on both sides of the debate.
Democrats, who now control Congress, are proposing a revision of the program. As reported by the AP (via the San Diego Union-Tribune),
Currently, private drug plans negotiate how much they'll pay for the medicine their customers take. But the legislation under consideration Friday would require the secretary of the Department of Health and Human Services to do so.
'It is clear Medicare can do better and we are insisting that they do so,' said Rep. John Dingell, D-Mich., the bill's author.
The Republican counter-argument was conveyed in a statement from the White House,
Government interference impedes competition, limits access to lifesaving drugs, reduces convenience for beneficiaries and ultimately increases costs to taxpayers, beneficiaries and all American citizens alike.
This argument against allowing the government actually negotiate what it pays for pharmaceuticals on behalf of American citizens is similar to that made by many conservative pundits. They often have characterized negotiation as virtually the same as price controls. For a sample argument from today's Washington Times, go here.
Of course, the Medicare program also pays for hospital and physicians' services. And for many years, the government has simply imposed fees on the latter. This is one major reason that primary care physicians' income has fallen farther and farther behind inflation (see post here). For my argument that this is a wooden-headed reimbursement policy, see previous posts here, here and here.
But I not recently heard any conservative commentators decrying government "price-controls" on physicians' fees, even as such controls are driving primary care physicians out of business.
So why are Republicans and conservatives so worried about the government negotiating what it pays for pharmaceuticals, while they are perfectly happy for the government to impose fee schedules on physicians?
On the other hand, while the Democrats have proposed "negotiation," they "would ban any attempt to limit the array of drugs available to Medicare beneficiaries by creating formularies. That stands in contrast to the Veterans Administration, which has lower prices for its beneficiaries but uses formularies that limit patient choice." How the government could effectively "negotiate" prices without the power to refuse to pay for drugs whose prices were too high is unclear. The Democrats also would leave intact a controversial ban on the re-importation of drugs from other countries.
A Washington Post article suggested why the Democrats did not go further,
So despite Democratic protestations that they are out to make Medicare "do better," whether the Democrats will end up much less cozy with the pharmaceutical and biotechnology industries than were the Republicans remains to be seen.
They stepped back largely out of concern that the pharmaceutical industry would stall a complex change, denying them a quick victory on a top consumer-oriented priority, aides say.
They had reason to be wary: Despite years of lopsidedly favoring GOP lawmakers with campaign cash and other benefits, the drug lobby continues to wield tremendous power in the Democratic-controlled Congress. It also still has the backing of the White House: President Bush said yesterday that he will veto the Democratic proposal if it lands on his desk.
To strengthen their position, drug firms and their trade groups have been transforming their Washington operations by hiring top Democratic lobbyists to gain access to new committee chairmen, bolstering Democratic political donations and spending millions on public relations campaigns to overcome an image, indicated in recent surveys, that the industry puts profits ahead of patients.
Even longtime industry nemeses like Rep. Fortney 'Pete' Stark (D-Calif.), chairman of a House health panel, are impressed. 'They're pretty potent,' he said this week. 'They're not bush-leaguers when it comes to spending money and lobbying.'
This month alone, the Pharmaceutical Research and Manufacturers of America spent more than $1 million on full-page newspaper ads touting the success of the existing Medicare drug system.
Drug companies spent more on lobbying than any other industry between 1998 and 2005 -- $900 million, according to the nonpartisan Center for Responsive Politics. They donated a total of $89.9 million in the same period to federal candidates and party committees, nearly three-quarters of it to Republicans.
'You can hardly swing a cat by the tail in Washington without hitting a pharmaceutical lobbyist,' said Sen. Charles E. Grassley (R-Iowa), a key sponsor of the 2003 legislation that created the current program.
The drug industry lobbying effort started to tilt Democratic as soon as it was clear that Democrats were headed for victory in the midterm elections. The industry is working "to expand areas of contact, develop relationships with those who are in charge," said former senator John Breaux (D-La.), a lobbyist for the industry.
The political action committee of the drug company Amgen gave Rep. John Conyers Jr. (D-Mich.), the new chairman of the House Judiciary Committee, $8,500 during the 2006 election cycle, amounting to three-quarters of all its donations to him over the past decade. In the Senate, GlaxoSmithKline's PAC contributed $8,000 during the cycle to Sen. Kent Conrad (D-N.D.), the new Budget Committee chairman. That is more than the $6,000 total that the PAC had given to Conrad since 1997.
Helping lead the industry's charge is Breaux, the former senator, who is one of only two Democrats who played a role in drafting the 2003 bill. He said he plans to hopscotch the country holding public seminars on solving health-care problems, often in the states and districts of members of Congress who are pivotal to drug legislation. It is part of a program, called Ceasefire on Health Care, that is bankrolled by the drug company Pfizer and has featured speakers such as Sen. Blanche Lincoln (D-Ark.) and Sen. Gordon Smith (R-Ore.), who both sit on the Finance Committee.
'We need to get access to key Democrats now,' said former representative James C. Greenwood (R-Pa.), president of the Biotechnology Industry Organization, a prominent industry group.
But all this talk about increasing industry access to the country's legislative leaders leaves out consideration of what sort of access the real people who are affected by this legislation have.
It's yet another example of concentration of power in health care, with the health care professionals, and the particularly the patients on the short end.