Hooked on Drug Money: Will Congress Take a Stand on Medicare? (Truthout)

[marmar]

Hooked on Drug Money: Will Congress Take a Stand on Medicare?
By Dean Baker
t r u t h o u t | Columnist

Wednesday 10 January 2007

It's payback time, as the lobbyists say in Washington. One of the key planks in the Democrats' election platform was changing the Medicare drug benefit by allowing Medicare to negotiate lower prices with the pharmaceutical industry. While this may not have been as important to their victory as the war, voters were outraged by the Medicare drug bill approved by Republican Congress. The benefit was designed to enrich the pharmaceutical and insurance industries at the expense of taxpayers and beneficiaries.

Now the Democrats are in a position to make good on their promise to reform the bill, and the pharmaceutical industry is going all out to protect its future profits. The basic story here is very simple. The prices paid by the insurers participating in the Medicare program are far higher than the prices paid by the Veterans Administration or governments that negotiate directly with the drug companies.

If Medicare negotiated similar discounts with the industry, it could save taxpayers and beneficiaries between $300 and $400 billion dollars over the next decade. This comes to between $2,500 and $3,500 per household. In technical terms, this is real money.

In order to protect its profits and the big bucks earned by the CEOs, the industry is pulling out all the stops to make its case. This means making every claim imaginable, some of which are even contradictory.

Claim #1 is that the government cannot get lower prices than the private insurers. This could be true if the people running the Medicare program were uniquely incompetent. We have the data. The Veterans Administration pays prices that average 40 percent less than the insurers participating in the Medicare program. The same is true of the Canadian government, the Australian government, and all the other governments of wealthy countries that run health care programs. If we really have such incompetent people running Medicare, then we need to replace them with qualified managers, but that is not an argument against reforming the program.

It is important to remember that drugs are cheap. Wal-Mart is selling prescriptions of most generic drugs at $4 a piece. The only difference between the drugs that Wal-Mart sells for $4 and the ones that cost hundreds of dollars is that the latter enjoy government-created patent monopolies. It is only these patent monopolies that make drugs expensive; in nearly all cases they are cheap to produce. In principle, nearly all drugs could be profitably sold at $4 per prescription.

Claim #2 is that if Medicare negotiated prices, beneficiaries would only be able to get the drugs chosen by the government. This is wrong as well. The Veterans Administration has a formulary with preferred drugs available at lower prices. If patients have a need for drugs not on the formulary, they can still get them, they just pay a higher price - a price comparable to what the private insurers pay now. ......(more)

The rest of the article is at: http://www.truthout.org/docs_2006/011007A.shtml

[Lasher]

1. First rec on this gem.

Thanks for posting.

[Parisle]

2. This was predicted for a long time,...

--- Even before the 2000 election, I read in numerous politicial and financial journals that the pharmaceutical firms were the big money players in the election (along with Wall Street hoping to get its hands on Social Security funds) It will be very instructive as to how the democrats treat Big Pharma.

[Lasher]

3. Yep, I'm watching closely

I'm a little troubled when I hear some Democrats saying they want to 'compromise' on Social Security 'reform' but we'll see. Democrats are the best hope we have of protecting our social programs. If we hadn't won control of Congress I fear that Social Security as we know it would have been history.

It would be so cool to see all the 'privatized' programs such as Medicare Part D just rolled into traditional Medicare, and then let Americans know that we can cover everyone with the savings achieved by elimating the insurance company middlemen. I don't think that's going to happen until we again get simultaneous control of the Executive and Legislative branches or our federal government.

[Parisle]

4. You've raised a major issue, here,......

--- "Eliminating the insurance company middlemen?" Absolutely. By all means. The amount of avaricious "profit" now being sucked out of the health care delivery apparatus is revolting, and attends to everyone in the chain. Pharmaceutical firms, hospital "management" syndicates, insurers and law firms are not only using the helplessness and horror of illness and natural aging to prosper,... but they scarcely even try to conceal their disproportionate level of "bought-and-paid-for influence in government. Damn straight we could do it at least as effectively, and at half the cost in a public operating environment.

[Lasher]

6. Here's proof it would work

If we were to eliminate all the unnecessary overhead being caused by private insurance company middlemen, we could pay for all of the following with money we would save:

Offset the cost of covering the uninsured (estimated at $80 billion)

Cover all out-of-pocket prescription drugs costs for seniors as well as those under 65 (estimated at $53 billion in 2003)

Fund retraining and job placement programs for insurance workers and others who would lose their jobs under NHI (estimated at $20 billion)

Make substantial improvements in coverage and quality of care for U.S. consumers who already have insurance

This would be simple do. All we would have to privatize in reverse by folding everything into traditional Medicare. Here is a report of a January 2004 study that proves this would work:

http://www.citizen.org/pressroom/release.cfm?ID=1623

Edit: And get this - We're spending twice as much as Canada for our healthcare.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=222x10618

We're paying more to get less. As of 2005 we had 46.6 million Americans without health insurance.

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=132&topic_id=3038912&mesg_id=3038912

[nuxvomica]

5. Thanks for posting. I wanted a simple debunking of those claims.

On the way home I listened to a commentator on Marketplace use all three arguments and give the childhood vaccination program as an example of the dangers of government negotiating. When I got home, I turned on C-Span and their was a congressman from GA making the same exact arguments as the commentator, including the same example! I knew they all had their talking points and they are pretty much using them verbatim.