No doubt you have seen some of the numbers about the assault that corporate lobbyists mounted to try to block health care reform: In 2009 spending on health-care-related lobbying and TV advertising topped $700 million. The Center for Public Integrity reports that much of that money funded the 4,525 healthcare lobbyists who swarmed the capitol– eight for every member of Congress. You couldn’t beat them off with a stick. Of course, many legislators didn’t want to.

Yet despite that extravagant effort, National Journal Contributing Editor Eliza Newlin Carney questions whether the health care industry’s lobbyists got good value for their dollars.

 “For health industry players . . .  it's unclear whether all that lobbying, advertising and check-writing yielded much,” Carney writes. “At bottom, partisan rifts and fickle political winds have done more to derail proposed health care changes than any lobbying campaign. That stands in contrast to President Clinton’s failed health reform plan 16 years ago, which ran aground in part because of deft insurance industry lobbying.”
That last sentence made me pause. I remember 1994, and it’s true. Lobbyists played a much, much larger role in maiming, and then killing reform.

Congress was not so polarized. Quite a few Republicans were willing to join Clinton in forging a health care reform bill that would not have been that different from the legislation just passed—and far less expensive. (If we had begun to regulate health care in the early 1990s, the nation’s health care bill would never have spiraled the way it has in the past ten years).

But this time around, ideology played a far larger role. Today, the majority of Republican legislators are Xtreme conservatives who adamantly oppose government intervention in our health care system. As for universal coverage, they are certain that it would cost too much while covering people who view as “Not-Me-or-My-Family.”

By contrast, over the past year most lobbyists representing our medical-industrial complex pretended to favor reform (at least most of the time).  They hoped that by appearing to support President Obama’s effort, they might soften the effect that reform would have on their particular fiefdom within our $2.6 trillion healthcare empire. 

On the question of whether these 21st century lobbyists got a bang for their bucks, Carney quotes Richard Kirsch, national campaign manager for Health Care for America NOW, a liberal coalition that spent millions to support comprehensive reform: "I think the larger political narrative, and what's going on in the grassroots around the country, is much more important than any traditional lobbying.”

"In the end, it's not about the lobbyists," Peter Jacobson, a professor of health law and policy at the University of Michigan told her.  "It's about the Democrats, and it's about the failure of advocates for health reform to coalesce around a solution that can be enacted.” (Jacobson said this at the beginning of March, before Congress surprised many by actually passing the legislation.)  In other words, in the face of such fierce conservative opposition, Democrats fell into disarray, and began debating themselves.
 
                     What Did Lobbyists Get For Their Money?

Carney’s thesis is bound to be controversial. No question, corporate lobbyists have far too much control over our government.  They “own” many legislators. This is a fact that cannot be disputed. This nation desperately needs campaign finance reform.

But in this case– the war over health care reform– I have to agree that she has a point. Consider what lobbyists won in return for their largesse. Granted, they enjoyed one major victory: the public option vanished from the legislation. For-profit insurers won’t have to worry about trying to compete with a government- sponsored insurance plan that would enjoy significantly lower administrative costs.

But can lobbyists really be given credit for killing the public option?  Senator Joe Lieberman stands out as the executioner. When he said “I’m not going to let this happen,” Congress was on the verge of passing legislation that included the public option. But moderate Democrats were looking for a leader, and Lieberman carried the day.

Of course it’s somewhat difficult to separate the man some call “the Senator from Aetna” from the insurance industry and its lobbyists. But many observers agree that Lieberman decided to flex his muscles, not out of loyalty to Connecticut’s insurance industry, but out of spite. He was still very angry that Democrats allowed liberal Ned Lamont to run against him in the state primary. Lieberman wanted to “show” the Obama administration what happens to anyone who dares to cross him.

Moreover, even if you give the insurance industry at least partial credit for nixing the public option, you still have to reckon with the fact that, despite the hundreds of millions that the insurance lobby laid out,  for-profit insurers are not, in the end, big winners. Close scrutiny of the legislation reveals that they face a combination of cuts to Medicare Advantage funding and new regulations that will make it very difficult for many of them to remain in business.  As I explain in detail, here, contrary to the conventional wisdom, health care reform is not a “boon” for insurers. 

Finally, I agree with those who say that the public option is likely to be resurrected, sometime in the next three or four years. Very likely private-sector insurers just won’t be able to create enough affordable plans that meet the new regulations. In order to provide choices in the Exchanges, I expect that the government will need to bring back the public option.

                Lobbyists Representing Pharma Did Better—For Now
 
Drug-makers, on the other hand, will be winners–at least for now. Thanks to government subsidies that will make insurance affordable for low-income and middle-income Americans, millions of patients will be able to buy the meds they need.  And as the “donut hole” closes, more seniors will be buying more drugs.
In addition, brand-name biotech drugs won 12 years of protection against cheaper generic competitors.

Pharma did agree to contribute roughly a $95 billion over ten years, to the reform effort, but analysis by Goldman Sachs describes this as ‘a manageable hit’ while predicting that, over the same span, drug company stocks will rise. 

This suggests that those who believe that reformers should have demanded more from the pharmaceutical industry are right. (Though others warn that if the administration hadn’t cut a deal with the industry, Pharma would have begun running the negative television ads that played a crucial role in sinking Clintoncare. It’s worth noting that reform passed by a very narrow margin—if Pharma had lined up on the other side, that might have tipped the balance. We’ll never know.)

What is certain is that drug-makers dodged the big bullet: Reform legislation does not allow Medicare to negotiate for discounts on drugs.

But this is another area where I’m pretty certain that reform legislation will have to be amended. Medicare simply cannot afford to continue to pay exorbitant prices for many medications—particularly cancer drugs. 

Congress could try to repeal the provision in the Medicare Modernization Act (MMA) that says that Medicare cannot bargain with drug-makers—though conservatives would balk at “government interference” in the free market, and liberals would face a major battle. Some suggest that there are ways to cut Medicare’s drug bill that wouldn’t’ require as much heavy lifting.

For example, an article published in Health Affairs online in July suggests that Congress could reduce drug prices for low-income seniors by providing the drugs through Medicaid rather than Medicare. The MMA made Medicare the primary prescription drug source for poor seniors who are eligible for both Medicare and Medicaid. Since Part D Medicare drug prices  run about 30 percent higher than Medicaid prices, returning the 6.2 million "dual eligibles" to Medicaid drug pricing could save as much as $2.8 billion annually, The authors also point out laws have been proposed in some states to reduce the scope of generic substitution for certain classes of drugs. They suggest that say a federal generic substitution law could prevent local legislative retrenchments and promote uniform generic access.

But didn’t the White House make a deal with Pharma, putting a cap on how much revenue the industry might lose ?  No one knows exactly who in the White House gave Billy Tauzin, Ph
arma’s head honcho, certain assurances. But Congress is not bound by any “deal” that White House officials agreed to. Nor is Medicare. And Tauzin is being forced out of Pharma; in June he steps down.

One way or another, large drug makers are going to see their 16% to 18% profit margins clipped. I suspect that comparative effectiveness research will play a major role in reining in drug spending. As The New Republic’s Jon Cohn explains: “Comparative effectiveness is the study of which medications work best. Given the amount of money Americans (and their insurers) spend on medications widely believed to offer little, if any, clinical benefit, such research is bound to curb industry revenues in the future. And while the Obama Administration promised not to seek further concessions for now, it explicitly reserved the right to pursue more aggressive changes later on.”

The bill that President Obama signed provides further funding for comparative effectiveness research by establishing a nonprofit organization to identify research priorities and conduct research comparing the clinical effectiveness of various medical treatments. Granted, the legislation also says those findings "may not be construed as mandates, guidelines, or recommendations for payment, coverage, or treatment; or used to deny coverage."

But once the research is published, nothing prevents doctors from taking it into account when prescribing —or insurers from using it when deciding what to cover.  Organizations like Kaiser, the VA, the Mayo Clinic are bound to consult the research when deciding which drugs to include in their formularies—just as they did when they decided to remove Vioxx from formularies a year before Merck was forced to take it off the market.  Inevitably, journalists will write about the research. And some patients will begin asking their doctors questions about prescriptions for some medications.

Already, the mainstream media is questioning the effectiveness of two major categories of drugs that have been driving industry profits: cholesterol-lowering drugs (a.k.a. statins) and cancer drugs that can cost $10,000 a month.

What’s striking is how the mainstream press has been questioning statins: Early in 2008, Business Week ran a brave cover story headlined: ““Do Cholesterol Drugs Do Any Good?” The sub-head: “Research suggests that, except among high-risk heart patients, the benefits of statins such as Lipitor are overstated.”  A month ago, the New York Times ran a story suggesting that “statins may not be as safe as doctors previously thought.”  And these are just two of many pieces that have made many patients think twice about staying on statins. One would think these drugs would be an obvious candidate for the new comparative effectiveness team.

When it comes to cancer drugs, the public is less likely to embrace the idea that we are overspending. Many people taking Lipitor are not experiencing symptoms, and thus, they’re open to the possibility that they don’t need the drugs. By contrast, cancer patients are desperate. It’s going to be hard to persuade them that one more drug might not save their life—or at last give them a reprieve until another new drug comes along.

Nevertheless, the mainstream media has begun to tackle the subject. In January of 2009, Business Week ran a story headlined: “Soaring Cancer Drug Costs May Cripple Medicare.” It explained that Medicare spending on drugs administered in a doctor's office– the vast majority of which are cancer treatments, rose from $3 billion in 1997 to $11 billion in 2004– a 267% increase. Over the same span, all Medicare spending rose by only 47%.

But it’s not just the cost. The real question is: do the newest, priciest drugs provide extra benefits for the patient? Business Week quoted Memorial Sloan-Kettering Cancer Center’s Dr. Peter Bach who argues that the high spending on the newest cancer drugs has brought little advantage to patients: "It's pretty clear with many of these new drugs, their cost effectiveness is lower than previous drugs," Bach told BusinessWeek. "For each extra day or year of life they give, we're paying more than we did for the last one."

The FDA doesn’t require head to head comparisons when it approves a drug. Thus we never know whether a new product is better than older products that are already available. Back in 2009, Bach suggested that the government should “establish a center for comparative effectiveness—a concept embraced by President Obama's Administration—that would determine when a cancer drug's use is reasonable and necessary, based on clinical research.”

Now we have the center. With physicians like Bach raising questions, it seems likely that it will take a closer look at some of the entries in the war on cancer.

Moreover, reform will reward physicians and hospitals which provide “patient-centered” care. And that means giving very sick patients a chance to share in decision -making about what treatments they want to pursue. Rather than being told “This is what we do next,” a palliative care specialist is likely to ask: “What would you like to do? Here are the possible risks and benefits if we do this. . . On the other hand, we could try this. You could expect these side effects, but you could hope to gain several months. Or, you might prefer to go home for a while. There, you can receive palliative care –and further treatment, if you wish. There’s no rush; you can think about it, and we’ll talk about these decisions again.”

When patients are given a chance to weigh in, research shows that often they choose a more conservative course of treatment. This is another reason to suspect that drug-maker may watch those profit margins fall in the years ahead.

In part 2 of this post, I’ll comment on what lobbyists for physicians and hospitals did and didn’t win, and return to Carney’s thesis that “At bottom, partisan rifts and fickle political winds have done more to derail proposed health care changes than any lobbying campaign. . .  what [went on] in the grassroots around the country is much more important than any traditional lobbying.”