Big Pharma's Health Care Reform Playbook

The drug industry gets a disproportionate share of attention when it comes to the high cost of medicine. Drugs and biologics, whether prescribed by physicians or administered in clinics and hospitals, account for just 10 to 12 percent of health care expenditures, significantly less than, say, the 15 to 20 percent administrative overhead associated with allowing private firms to sell health insurance (as compared to the 3 to 5 percent overhead associated with the nation's largest single-payer organization, Medicare).

Still, Congress' ability to curb the explosive rise in drug costs is a bellwether of the political prospects for health care reform. Along with eliminating unnecessary payments to insurance firms (like the 12 percent bump they get for selling Medicare Advantage plans), curbing Big Pharma's voracious appetite for selling overpriced and often unnecessary drugs is the low-hanging fruit of cost control.

An article in today's Washington Post reveals just how hard that is going to be. According to the Center for Responsive Politics, Big Pharma lobbying expenditures have tilted sharply in the two years since the Democrats took control of Congress. Democrats, who only received a third of industry lobbying money in 2006, now get fully half, more than at any time since at least 1988.

And it appears to be working. The prospects for legislation allowing Medicare to negotiate with drug companies for lower prices now that we have a prescription drug benefit for seniors? Dead in the water. The Canadian import bill (another major Democratic Party initiative)? Stopped.

And who are the lobbyists newly hired by Big Pharma? Former top aides for House Speaker Nancy Pelosi (D-CA), Senate Finance Committee chair Max Baucus (D-MT), House Ways and Means Committee chairman Charles Rangel (D-NY), and Senate Health Education Labor and Pension Committee chair Ted Kennedy (D-MA).

The Pharmaceutical Research and Manufacturers Association, the industry's main lobbying group, is leaving nothing to chance. It's signed on to lobby in support of issues not germane to the drug industry in the hope that it will curb their new allies' appetites for going after Big Pharma. So PhRMA, headed by former Congressman Billy Tauzin, is now working with AARP on universal health care, the American Lung Association on clean air and the Partnership for a Drug-Free America to curb the use of illegal drugs.

Don't think that the insurance industry, organized medicine, the hospitals, the device manufacturers and all other providers to the health care system aren't paying close attention to the Big Pharma playbook. Universal health care that costs the taxpayers a bundle (or increases everyone else's fees) is one thing. But tying effective cost control to health care reform is quite another.

If the drug industry succeeds in deep-sixing drug pricing reform issues in this Congress, it bodes ill for other, more far-reaching cost control measure in the next -- measures that are crucial to successful health care reform.

Posted by gooznews at March 12, 2008 08:50 AM