Big Pharma is a trillion dollar industry that has established a practice of demanding outrageous ransoms for new breakthrough therapeutics to treat life-threatening and chronic debilitating diseases. And, Congress has legalized their behavior with the passage of Patent laws, the 2003 MEDICARE MODERNIZATION ACT (MMA) and weak government regulations, oversight and enforcement.
Big Pharma’s Money and Influence over Congress
Big Pharma leads all other industries in spending billions of dollars on lobbying to gain preferential treatment with Congress’s federal laws and administrative regulations. In addition, many members of Congress, administrative officials and health care providers have been generously rewarded for their support of Big Pharma over the interests of patients and taxpayer
According to a recent New York Times story, pharmaceutical and devise firms paid $6.5 billion to physicians and hospitals last year. About 80% of the total payments went doctors whose prescribing decisions directly affect the profits of pharma and device firms. Payments were made to 610,000 doctors and 1,100 teaching hospitals.
According to the Center for Responsive Politics (CRP), the pharmaceutical and health products industry employs more than 3 lobbyist for every member of Congress; spends about $1.2 million lobbying every day Congress is in session and has created a career path for dozens of loyal Congressional and administration public employees to become well-paid private-sector pharma lobbyists.
The vast majority of Democrats and many Conservative Republicans opposed the MMA bill for different political and ideological reasons and it initially passed the House by just one vote. However, the Republican House Leadership heavily lobbied members of Congress and Big Pharma spent over $125 million to convince Congress to pass this very complex and costly drug benefit in which they were the primary beneficiaries.
To help build support, Big Pharma contributed nearly $10 million to federal candidates in the 2004 election campaign with 70% going to Republicans including more than $500,000 going to the re-election of President Bush.
Republican House Majority Leader Tom DeLay and Congressman Billy Tauzin were very effective in twisting arms, threatening and offering special deals to members of Congress who voted for this legislation.
Tauzin, who steered the bill through the House, quit after its passage to accept a $2 million a year job as president of the Pharmaceutical Research and Manufacturers of America (PhRMA). More than a dozen congressional aides and administrative staff also quit their jobs to work for pharma lobbying firms.
Tom DeLay left Congress in disgrace after charges of ethics violations and Bush appointee, Thomas Scully, administrator of the Centers for Medicare and Medicaid Services also left his leadership position to become a lobbyist for drug companies.
Other notable “wayward fiscal conservative” Republican leaders that publicly supported and encouraged the passage of this costly, unfunded drug benefit included: Newt Gingrich, John Boehner, Eric Cantor, Elizabeth Doyle, Paul Ryan, Mitch McConnell, Rick Santorum and Orin Hatch. With their strong influence over members, the MMA law was finally passed in 2003 with a slim margin by the Republican Congress and signed into law by President George W. Bush, just in time for his re-election campaign.
Bush went on to win a tight re-election against John Kerry with the smallest popular vote margin of any sitting president since Harry S. Truman in 1948. The passage of this new, complicated, unfunded Medicare drug program had the desired outcome of significantly increasing senior votes in support of Bush from 47% in 2000 to 52% in the 2004 presidential election.
Congress’s Unfunded Trillion-Dollar Medicare Drug Program
There has been long-standing public interest to reduce the high cost of health care and prescription drugs in the United States and to make these necessities available and affordable to everyone including seniors, similar to what has been done in Canada and European countries for decades.
However, partisan political conflicts and the controlling influence of millions of dollars from special interest to Congress has resulted in the status quo which profits the health care industry at the expense of patients, taxpayers and employers.
The new 2003 Medicare drug legislation did not include any cuts to existing federal spending to offset this new, costly benefit or to reduce the growing federal structural deficit for the existing Medicare Part B outpatient services and the Medicare Advantage plans that are run by private insurers.
Rather, the new Medicare Part D drug benefit, that it is run by private insurance companies, was made available largely by increasing the federal deficit.
Medicare beneficiaries contribute only 14% of the drug program cost and taxpayers pay the remaining 86%. The cost of the program is expected to grow significantly over the foreseeable future, due to uncontrollable drug prices established by drug makers and the growing senior population that uses them.
The annual cost of this drug program has grown dramatically to an estimated $76 billion in 2015. And, the 2014 Medicare Trustees report, projects the federal deficit just for the Medicare Drug program is estimated to go over $1 trillion in the year 2023.
Congress Restricts Competition, Purchasing Power and Consumer Protections
The 2003 MMA also includes a number of provisions that clearly benefit the financial interest of Big Pharma over the interests of patients, taxpayers and employers.
- prohibiting Medicare from negotiating drug prices for over 55 million Medicare beneficiaries; eliminating price competition with extended-term drug patents;
- making it illegal for citizens to purchase the same patented drugs, at a fraction of the price charged in the US, from Canada and other countries;
- allowing pharma companies to increase the demand for their drugs by directly marketing them to consumers on TV and other media;
- allowing pharma companies to withhold full disclosure of clinical data, adverse side-effects/incidents and the actual cost/benefit of drugs;
- providing minimum government oversight and sanctions for illegal and unethical pharmaceutical and device-maker behavior.
I welcome your questions and comments.
Future blogs will describe in greater detail: the high cost of specialty drugs; how drug prices are established; the backlash from stakeholders; and some hope for future changes.