On Alternet, Bill Moyers summarizes what happened in D.C. last week: “Push finally came to shove in Washington . . . .as the battle for health care escalated from scattered sniper fire into all-out combat.”
Moyers is right. But I’m more optimistic than he is about how this battle will end.
As usual, Moyers, pulls no punches: “As the Republicans fired away, big business stepped up the attack too, their lobbying and advertising guns blazing. The Chamber of Commerce, for one, announced a major campaign of rallies and print and Internet ads to crush the White House plan for a competitive public option allowing consumers to choose between a government plan and private health insurance . . .
“Supporters who want to scrap the present system for fundamental change are staring glumly though the fog of war at a battlefield in total disarray.
“They fear that in the White House's desire to get a bill — any bill – passed by Congress, it will have been so compromised, so bent to favor the big interests, that it will be less Waterloo than watered down, a steady diluting of the change they had hoped for and that America needs."
Moyers points out that some in the pharmaceutical industry seems to believe that victory is at hand: “The big drug companies are already so pleased with what they've been promised that they've brought back Harry and Louise — the make-believe couple who starred in TV ads that helped torpedo the Clinton health care plan — but this time they're in favor of reform.”
Moyers cites reports from the drug industry's trade group PhRMA (the Pharmaceutical Research and Manufacturers of America) and the drug company Pfizer which reveal that the drug industry spent “more money than other health care organizations on lobbying in the second quarter of this year’ – $6.2 million from PhRMA, $5.6 million from Pfizer.
“Including its latest report, PhRMA has now spent $13.1 million lobbying so far this year. Pfizer has reported $11.7 million in lobbying expenses for 2009.
“This is part of the reason, as Alicia Mundy and Laura Meckler recently wrote in The Wall Street Journal, that ‘the pharmaceuticals industry, which President Barack Obama promised to 'take on' during his campaign, is winning most of what it wants in the health-care overhaul.’
“Their story describes ‘a string of victories’ plucked from the Senate Finance Committee by drug company lobbyists, including no cost-cutting steps, no cheaper drugs to be allowed across the border from Canada, and no direct Federal government negotiations with the pharmaceutical companies to lower Medicare drug prices.
“And that's not all. The Senate Health Committee is giving the biotech industry monopoly protection against competition from generic drugs for 12 years after they go on the market.
“No wonder the cost of reform keeps going up and up and up. Could it be.” Moyers asks, “that Harry and Louise are happier because, this time, they're in on the deal?”
Drug-Makers Account for 16 percent of Health Care Spending
I would add that the drug industry plays a major role in driving health care inflation. Granted, last year Americans bought fewer prescription drugs than the year before –the first such decline in a decade. (More Generics are coming to market and prescription drug makers are having a hard time finding new products to peddle to the public.) But the Kaiser Family Foundation reports that total spending on prescription drugs still climbed in 2008 because drug-makers boosted prices for brand-name drugs by an average of 8 percent. According to Kaiser, price hikes are likely to mean that spending on drugs will rise by 3 percent to 5 percent in 2009, and by another 4 percent to 6 percent in 2010. That’s a 15 percent to 19 percent increase in just three years.
Some would have you believe that drugs prices play only a minor role driving health care premiums skyward because prescription drugs account for “just 10 percent to 11 percent” of the nation’s health care bill. But that figure refers only to the drugs that you and I buy retail, in a pharmacy. It does not include the many very pricey medications that are administered in a hospital, in a doctor’s office, or in a nursing home.
Moreover, pharmaceutical companies also have become big players in the medical device business, turning out everything from stents to artificial knees. And, despite the economic slump, “The relatively non-discretional nature of medical devices should support demand growth for this part of the healthcare industry in 2009," Fitch, a credit-rating agency reassured investors at the end of 2008.
In other words, if your doctor tells you that you need a
implantable cardioverter defibrillator (ICD), you have no choice, whatever the price. This is why manufacturers in the health care industry have so much pricing power. They can charge whatever they like. As Fitch points out, manufacturers who produce stents and ICDs enjoy “high profit margins.”
Add the devices to all of the medications in Pharma’s portfolio, and it turns out that the drug industry gobbles up roughly 16 percent of the $2.6 trillion that we, as a nation, spend on healthcare. And Americans pay more for these products than patients in any other part of the world.
This is in part, the New York Times’ “About.com: Patient Empowerment” website points out, because drug companies pass on the cost of promotion and advertising drugs and devices in the U.S:
“If you have watched TV or opened a magazine or newspaper in the past several years, you have seen drug commercials and ads which cost manufacturers, and ultimately patients as consumers and taxpayers, billions of dollars each year.” Keep in mind that the U.S. and New Zealand are the only countries on the globe that allow drug ads on television. Consumers in other countries do not have to pay for marketing that, critics say, interferes with the patient-doctor relationship.
The industry’s defenders like to argue we have to pay more for drugs so that the companies can invest in research and development. The truth is that the pharmaceutical industry spends twice as much on marketing and advertising as it spends on research. When it comes to new medications most ground-breaking work is done by NIH, using tax-payer dollars. Drug-makers come into the picture only when it seems pretty clear that there is good money to be made on the new product. Big Pharma does not like to take big risks.
As Dr. Marcia Angell explains in The Truth About the Drug Companies, after Ronald Regan won the White House, Congress passed the Bayh-Dole Act, a new set of laws that permitted and encouraged universities and small businesses to patent discoveries from research sponsored by the National Institutes of Health (NIH). Research paid for by the public to serve the public instantly became a private, and salable good—one that is producing drug sales of more than $200 billion a year. I’ve written about the Bayh-Dole Act here .
Pharma May Be In For a Surprise
But as House Speaker Nancy Pelosi (D. Calif) suggested in Sunday’s Washington Post, the for-profit health care industry’s “glory days” may be coming to an end. Let me suggest that Pharma may be a little too confident about that “string of victories plucked from the Senate Finance Committee.” That bill still has to be reconciled with the Senate HELP bill—and the House bill.
In that same article, Post staff writer Ceci Connolly observes that the mood in Washington is changing: “For months, the White House assiduously courted industry trade groups, attempting to neutralize historically powerful opponents of change. But the talking points for the August recess have moved to a sharper critique of business interests. House Speaker Nancy Pelosi and top lieutenants have warned that they are not bound by deals the White House struck with drug-makers and insurers.”
Nor did I hear the White House make any explicit promises to Pharma.
What I did hear about was an amendment to the House bill that liberals proposed on Friday. It would authorize the government to negotiate prices in the Medicare prescription drug program, a suggestion long opposed by drug companies and insurers that administer the program. Friday, that amendment was adopted 32 to 23.
Connolly also quoted Sen. John D. Rockefeller IV saying that Obama should be "very aggressive" this month in rebutting attacks by well-funded interest groups. "He's got to get tough," Rockefeller said, "maybe tougher than he's ever been." Last week Rockefeller sounded discouraged and depressed. This week he sounds angry.
Finally, Connolly observed: “The tensions have prompted Senate Democratic leaders to revive threats to use a parliamentary procedure to force health-care legislation through on a simple 51-vote majority rather than a filibuster-proof 60 votes.” Today, on Politico.com Glenn Thrush also noted that “reconciliation is getting a second look.” This might not be the ideal way to pass the legislation, but as I have argued in the past, real health care reform is too important—to the economy as well as to the society—to become focused on process. Results are what will matter.