Many times in the health care reform debate, we argue between reals and ideals. We say “Well, this plan might be better, but it’ll take a long time to become law, so let’s pass this other one right now, to help people in the meantime.” And generally it’s a decent proposition. Larger changes take longer to implement. But boy, in the case of this Medicare prescription drug benefit, the something is turning out to be *worse* than the nothing.
It started out with great promise: help seniors pay for their medications. Seniors have low incomes and large medication lists, so by decreasing their costs for medications, they might not have to skip a meal or two to pay for their Lipitor. What a deal!
It ran into problems when everyone started to realize that the bill would essentially be written by the pharmaceutical industry (no one really seems to deny this). Seniors are supposed to get a discount on their drugs, and if they pay too much, the federal government steps in and helps to pay for them, too. This sounds all fine and dandy, until you realize that the pharmaceutical companies have increased the drug prices 4.3 times inflation in the last year, so that whoops, look at that, even *with* the discount the drugs are still the same price. Funny how that works.
Senator Mark Dayton (D-MN), who uses his Senate salary to pay for trips to Canada so seniors can buy cheap meds, opposed the prescription drug bill, and for good reason: it won’t help many seniors, and will actually hurt some of the most vulnerable. Ah, the law of unintended consequences. A report that Senator Dayton quotes by the Congressional Budget Office predicts that the seniors that currently have good prescription drug coverage will probably lose their coverage, as employers drop their retired employees’ drug coverage, since the government will be paying the tab. And hey, will you look at that–it came true!
bq. New government estimates suggest that employers will reduce or eliminate prescription drug benefits for 3.8 million retirees when Medicare offers such coverage in 2006.
In a “well, duh” analysis the bill, Gerald Anderson of Hopkins says that if we lowered prices, it would fix the Medicare drug plan. Holy hell, Gerry, what a brilliant plan! But he’s worried that by cutting prices, drug companies won’t make as much money, and therefore won’t invest in as much R&D. Never a more bogus claim if I’ve ever heard one. Drug companies spent twice on advertising what they do on R&D; so wouldn’t they just spend *less* on advertising? No company is going to hault their drug development process, or else their future profits would be gone, and they’d cease to exist. Patents, although ridiculously long in this country, don’t last forever.
Senator Dayton makes a number of other great points in his speech:
bq. Now, why are the prices so much lower in Canada than they are in this country? It is because the Canadian Government stands up for its citizens and negotiates prices that are lower and will not agree to prices that are exorbitant. And their citizens are the beneficiaries of these prices that are one-third, one-fourth, one-fifth of what they are in the United States–not even close approximations.
People say the Government ought to act more like a business, and they are right. What we are proposing the Government would do is exactly what large corporations which self-insure or HMOs do, which is to purchase volumes of prescription drugs at negotiated discounts of 30 percent, up to 50 percent. It is exactly what my colleague BOB GRAHAM from Florida has pointed out, that the Veterans Administration does quite successfully, with fantastic savings for veterans and for the American taxpayers who pay for part of the cost of that program.
But not under this legislation. This legislation would prohibit what they call Government interference in price setting negotiations. Why? Well, once again, the words of the bill belie the intent and the result. It says: “in order to further competition.” What deception that is. It says, let a bunch of small-competitor plans offer nickel-and-dime savings, but prohibit the Government from insisting upon and getting 5 times, 10 times that amount of savings, savings that would benefit everyone in America–seniors and everyone else. Those price reductions would be reflected in domestic market prices.
The critics call it price fixing. Well, there is price fixing now in this country. It is the drug companies that are doing the price fixing. They are given monopolies, called patents, for 15 to 20 years or more. They set the prices, they raise the prices, and we have to pay the prices. But that kind of price fixing, I guess, is all right according to some who want to prohibit the Government from doing so.
Does anybody really believe Americans are going to be upset about paying lower prices for prescription drugs? Does anybody think consumers in America are going to say: Government is acting in a way that I don’t support? In fact, it will be the opposite. People will say: Wow, my Government is doing something for me. My Government is standing up for me against these big corporate entities that I don’t have the ability to face by myself. I don’t have that purchasing power. I can’t go to a drugstore and negotiate price. Even as a pharmacist I can’t negotiate a different price. My Government is standing up for me the way the Canadian Government is standing up for their citizens. By golly, my Government is doing something right.
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