Big Pharma, whose lobbying winning streak shows no sign of ending, has lured Democrats into a Faustian bargain.
In exchange for a $150 million advertising campaign featuring a sadder and sicker Harry and Louise, drug industry lobbyists have quietly been handed almost everything they wanted out of health care reform legislation. Unless the Democrats on Capitol Hill rediscover their campaign rhetoric, the legislation:
- Will not allow Medicare to negotiate drug prices, a core Democratic demand promised BY candidate Barack Obama
- Will not contain even a mildly restrictive drug formulary, where Medicare establishes a "don't buy" list of drugs where there clearly are cheaper and equally effective alternatives
- Will give Big Pharma and other provider interests a seat at the table when comparative effective research priorities get established, ensuring that medical arenas with huge potential for cost savings go unaddressed, and
- Will give biotech firms at least 12 ½ years of market exclusivity for their drugs before biogenerics are allowed to enter the market, extending their high-price marketing period beyond patent expiration if necessary.
Those who've long followed the drug industry lobbying in Washington won't be surprised by this outcome. This is an industry that has not suffered a serious lobbying defeat in more than quarter of a century.
Even the 2007 Food and Drug Administration reform bill, passed in the wake of the Vioxx fiasco, did not challenge the industry's core economic interests. Its major change, giving the FDA more power to insist on post-marketing safety surveillance, was a reform that was long overdue for an industry that has increasingly come to rely on blockbuster drugs whose long-term risks and long-term benefits are all too often nearly identical.
So now, come 2009, what have the Obama administration and the Democratic leadership gotten for giving in to every core industry "ask"? The $80 billion in drug industry "savings" over the next decade--announced with much fanfare in a White House Rose Garden ceremony two months ago--amounts to a mere 2 percent of the total drug tab over the next decade, which is still slated to grow at somewhere between 1 ½ to 2 times the rate of inflation--just like the rest of the health care economy.
Moreover, the promise came in the form of aid for some seniors, which does nothing to raise money for the uninsured. PhRMA promised to lessen the pain of the doughnut hole that many seniors fall into when their drug bills exceed $2,500 a year. That helps those individual seniors reduce their out-of-pocket expenses, but it's nothing to the bean counters at the Congressional Budget Office since it saves Medicare nothing.
Past is prologue here. Since at least the mid-1980s, PhRMA has gotten just about everything it wanted out of Washington, ensuring that its share of the health care pie would grow even faster than health care as a whole. Drug expenditures are now about 12 percent of the nation's $2.4 billion health care tab, up from less than 8 percent in the 1980s.
How did that happen? In the late 1980s, the industry fought for and won an accelerated approval system for drugs that combat life-threatening diseases. It made sense at the dawn of the HIV/AIDS; it is questionable when used for cancer drugs that cost a small fortune but barely improve life expectancy if at all.
In the 1990s, constant drug industry bellyaching about delays at the FDA led to passage of the Prescription Drug User Fee Act, which is reauthorized every five years. Besides the inherent conflict of interest of drug reviewers having their salaries depend on the companies whose products they're reviewing, it put those reviews under tremendous time pressure. The law gave the agency just one year to get a new drug application out the door.
Not surprisingly, over the next decade the industry was hit by a series of high profile recalls: Fen-Phen, Seldane, Rezulin, and, finally, Vioxx, where an estimated 40,000 to 100,000 people died from unnecessary heart attacks because they took a pricey arthritis painkiller no more effective than proven over-the-counter medications like ibuprofen or acetaminophen. It was a field day for investigative reporters and trial lawyers, not so good for patients and consumers.
Of course, those drugs wouldn't have won rapid "acceptance" in the marketplace if it hadn't been for the vast expansion of drug industry marketing that took place in the 1990s and continues to this day. New rules passed in 1997 enabled a vast expansion of direct-to-consumer (DTC) advertising on television. When reformers tried to put a few limits on DTC in the 2007 reform bill, drug industry lobbyists easily defeated their efforts, claiming the restrictions - which had been in place since the dawn of television - were an unconstitutional restriction on commercial speech.
And in this decade, as the storm over drug pricing emerged and the failure of Medicare to provide prescription drug coverage became a national scandal, the industry welcomed passage of the 2003 prescription drug benefit - as long as it didn't impose price controls or allow Medicare to negotiate prices or even set restrictive formularies.
Remember when seniors were climbing on buses to go to Canada to buy cheaper drugs? It was against the law then, and it's still against the law as Big Pharma beat back every effort to allow what are known in the trade as parallel imports from countries where drugs are cheaper because their governments aren't in the thrall of industry lobbyists.
Reformers were naïve if they thought the world had changed simply because there were new tenants in the majority offices on the Hill or in the White House. Even before President Obama's election, drug industry lobbyists had strategically shifted their campaign contributions to Democratic legislators who had won control of Congress two years earlier.
Before 2006, Democrats received just a third of Big Pharma's campaign contributions. Now they get well over half. Drug firms also recruited a new cadre of K Street lobbyists. The new firms that won their businesses included on the rosters former top aides to House Speaker Nancy Pelosi, Ways and Means chairman Charles Rangel, Senate Finance Committee chair Max Baucus and Senate Health Education Labor and Pensions chair Ted Kennedy.
The bottom line is that Big Pharma has had its way in Washington for a long, long time. And nothing in this year's health care reform battle indicates that its winning streak is about to end.