Big Pharma Loves Your Wallet

  

When the Affordable Care Act (ACA commonly known as “Obamacare”) was passed in 2020, the only way it could get through even a Democratically controlled Congress was to accommodate the mega-powerful-campaign-contributing-lobbying healthcare business juggernauts: insurance carriers and pharmaceutical manufacturers (“pharmas”). To placate insurance carriers, the notion of a competing governmental expansion of “Medicare for all” was shelved and replaced by a simple mandate for every American to secure healthcare coverage, with government subsidies for those unable to afford to pay, a coverage requirement that was removed from the ACA by Congressional and judicial action years later. Yet to this day, ACA healthcare exchanges continue effectively, but their scope and application vary from state to state. 

The pharmas got the best part of the bargain: those massive ACA exchanges with obviously powerful bargaining power to set rates for prescription drugs were expressly forbidden to use that power to negotiate lower prices. They paid what pharmas told them to pay. As Donald Trump try to jawbone those rates down with greater transparency, nothing happened. When it was suggested that important prescription drugs from Canada might be a solution, Canada suggested it was not going to support that effort. 

Both parties have pledged to target the out-of-control price of prescription drugs – Americans pay on average more than double what the rest of the developed world pays for the same products – but when push comes to shove, both parties are so beholden to pharmas’ massive campaign contributions that actual workable price-containment programs fall by the wayside in congressional committees. Despite the obvious and massive (wasteful?) investment in the advertising campaigns for prescription drugs, the pharmas cried foul suggesting that their gigantic research and development commitments required that they, and not the government, set prescription drug prices. Yet even ordinary insurance carriers often engage in cost limiting negotiations with the pharmas, getting price reductions that are seldom passed on to individuals without the appropriate insurance coverage.

We continue to be the only developed nation in the world without universal healthcare. Germany, for example, uses private insurance carriers to administer one of the best healthcare programs on earth. Vision care, dental and hearing care are also covered. The German government has to review and approve all prescription drugs and their pricing structure before they can be distributed anywhere in Germany. Pharmas suggest that they are forced by these foreign price controls to shift R&D costs into the American marketplace, and that if that were not permitted, they would curtail their research accordingly. Of course, if any nation wanted a reasonable investment in such R&D, it would be vastly cheaper for the government to pick up the tab directly without the profit mark-up that makes pharma stocks so wildly successful. Like us, for example!

As Democrats in Congress wrestle with safety net infrastructure fixes they believe they can orchestrate without a floor Senate vote – one that that could never garner any significant GOP support (hence the filibuster rules would prevent passage even if the Dems could muster a majority vote) – they are focused on the budget reconciliation process that is exempt from that filibuster threat. There’s one particular catch that might be surprising, that many Americans expecting a prescription drug cost solution might not know. Democrats slorp at the pharma campaign contribution just as much as Republicans.

There is already enough Democratic Senate opposition to the Biden safety net infrastructure reconciliation bill. Democratic Senators, Joe Manchin, III (WVa) and Kyrsten Sinema (Az) already oppose the magnitude of that $3.5 trillion proposal.  But there is also the possibility that the significant prescription drug cost containment provisions of that bill will not even make it through a Democratically controlled House.

Jennifer Haberkorn, writing for the September 16th Los Angeles Times, looks at three House Democrats – Rep. Scott Peters (D-San Diego), Kurt Schrader (D-Ore.) and Kathleen Rice (D-N.Y.) – who oppose limiting drug prices in that reconciliation effort, which could endanger the entire Biden safety net bill: “Democrats are sharply divided over whether to require drugmakers to negotiate prices with the federal government, a rift threatening key parts of President Biden’s $3.5-trillion social safety net bill — including the possible expansion of Medicare and Obamacare — and one that could put the entire effort at risk.

“Three House Democrats on Wednesday [9/15] blocked the House Energy and Commerce Committee from advancing a provision to allow drug-pricing negotiation in favor of an alternative that other Democrats say is far weaker… Given the slim majority Democrats have in the House, if they remain opposed, they would be just one vote away from being able to block the entire effort on the House floor, assuming all Republicans remain opposed as expected…

“Rep. Scott Peters…  is leading the opposition to Democrats’ drug price plan, arguing that it would decimate investment in the pharmaceutical industry and threaten jobs, including about 27,000 in San Diego… ‘The promise we made was to lower drug prices, to negotiate with drug manufacturers,’ Peters said of Democrats’ decade-long pledge to voters. ‘We did not promise to kill the goose that lays the golden egg.’…

“Peters and Schrader’s alternative would allow negotiation on only a fraction of all prescription drugs, unlike the broader plan in the existing proposal… It would also enact a yearly out-of-pocket cap for Medicare enrollees who make a modest income and cap out-of-pocket insulin costs. Peters estimates that his bill would bring in $200 billion, far less than the $700 billion in savings in the existing plan.” 

Token solutions that provide few benefits for the vast majority of Americans are the dribs and drabs we often see as our elected representatives look for excuses to favor their well-heeled campaign contributors’ lucrative business interests. There are so many approaches to these problems, including going back to the notion of expanding Medicare to cover more than the disabled and seniors… but I suspect that while the GOP had no issue blowing up the deficit ceiling to implement a massive tax cut for the rich, they have no desire to increase any taxes to pay for benefits for the rest of us. And now, they have some interesting Democratic allies.

I’m Peter Dekom, and it is indeed sad to watch the “land of opportunity” turn into the “land of opportunists and special interests.”