Big Pharma’s Money Talks

By SAM URETSKY

One of the most useful web sites for understanding the headlines is OpenSecrets.org, which keeps detailed information about campaign donations, both by industry and individual corporations or trade associations.

It’s not perfect – there are super PACS without reporting requirements, and while they can’t openly support a candidate they can advocate for or against issues that may be relevant to the next election. Then there’s a question about the dinner table conversation between judges or members of congress on a billionaire’s yacht over a bottle of Lafite Rothschild Bordeaux. After all, these are simply buddies discussing personal matters and shouldn’t be misinterpreted.

Still, knowing where the reportable campaign contributions came from is a hint to where the senators and representatives are going.

One of the more useful charts on Open Secrets is the amount of money spent by industries and corporations for lobbying. Lobbyists are simply people who are paid to hang around the halls of power and engage old friends and former colleagues in friendly chat. Here’s the Top 5 list of lobbying expenses by industry for 2023 so far:

Pharmaceuticals/Health products $102,808,188

Electronics Mfg & Equip $58,100,085

Insurance $49,716,289

Electric Utilities $38.969,269

Health Services/HMOs $37,138,917

The lobbyists who work for Big Pharma may want to talk about Medicare, of course. Medicare Part D was enacted as part of the Medicare Modernization Act of 2003. The law was signed by President George W. Bush on Dec, 8, 2003, and it went into effect on Jan. 1, 2006. It had two important provisions: the creation of Medicare Advantage Plans (the ones you see on television with elderly actors telling you that you can get benefits that traditional Medicare doesn’t offer) and Part D, which covers prescription drugs.

The law specified that while the insurance companies sponsoring a Medicare Advantage Plan could negotiate drug prices with the pharmaceutical manufacturer, Medicare itself could not. Since Medicare was bigger than any single insurer, it would have had a great deal more leverage in price negotiations. The law also prohibited the Department of Health and Human Services from setting a formulary for Medicare Part D. A formulary is simply a list of which drugs will be covered (or carried by a hospital pharmacy) and which are not.

Sen. Joni Ernst, (R-Iowa), chair of the Senate Republican Policy Committee (RPC), has issued a summary of the changes to Medicare under President Biden’s Inflation Reduction Act which states: “The noninterference clause says: “the Secretary: (1) may not interfere with the negotiations between drug manufacturers and pharmacies and [prescription drug plan] sponsors; and (2) may not require a particular formulary or institute a price structure for the reimbursement of covered Part D drugs.” It leaves negotiations to insurers and other private businesses. Medicare Part D plans negotiate drug prices, determine which drugs are covered, and what patients will pay.

Insurers offer options that allow customers to pick the plan that best meets their needs. Each year, prescription drug plans participating in Medicare bid to contract with the program. The bidding process incentivizes insurers to keep prices low to attract Part D customers.

“The Part D system of private negotiation has worked. Beneficiaries can choose from a variety of different plans, premiums have been low and stable for many years. The vast majority of customers are satisfied with the program.”

Trouble with Sen, Ernst’s summary is that it omits three basic facts – the first is that nobody is going to sit down and compare the full details of a Medicare Advantage Plan every year, even if they understand the fine print. Second, the number of plans available depends on the state population. Low population states, Wyoming and Montana for example, have only two or three plans to choose from. States with high populations, California and Florida, have around 50 plans.

Also, because services like dental care are decided by the insurance company, the level of coverage is all over the lot, with some firms offering extensive coverage, and some offering none at all. Over the years there have been a number of bills proposed to make senior health insurance more comprehensive, covering dental, hearing, and other needs. None have made it into law.

The Inflation Reduction Act has very modest goals. According to CNN “The HHS secretary can negotiate the prices of 10 drugs for 2026, and another 15 drugs for 2027 and again for 2028. The number rises to 20 drugs a year for 2029 and beyond. Only medications that have been on the market for several years without competition are eligible.” These are only drugs whose price has risen faster than the rate of inflation.

In spite of this limit, in a suit filed on June 20, in the US District Court for the Western District of Texas, the Pharmaceutical Research and Manufacturers of America, (PhRMA), along with the National Infusion Center Association and the Global Colon Cancer Association, argue that the negotiation provision is unconstitutional because the Constitution has nothing to say about bisoprolol fumarate and hydrochlorothiazide?

Anyway, by the time the proposed changes go into effect, some artificial intelligence programs will be able to review your medical records and the health plans available. Maybe Big Pharma should stop paying for lobbyists and hire hackers instead.

Sam Uretsky is a writer and pharmacist living in Louisville, Ky. Email sdu01@outlook.com.

From The Progressive Populist, August 1, 2023

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