Promises, Promises

Walk down any street in the great city of Philadelphia and chances are almost one out of every ten people you pass will be medically uninsured. Besides the Eagles, you could fill Lincoln Financial Field twice with individuals without healthcare. Half the riders sitting or standing on the bus or train on a daily basis could be worried about how their next medical bill is going to be paid.

Statistics show there are 131,000 Philadelphians without health care insurance. Since 57% of these uninsured people work either full- or part-time, there was practically no chance of obtaining coverage on the job. But thanks to the Health Care Reform Act, also known as the Affordable Care Act, this will change. By 2014, employers with 50 or more employees will be required to provide healthcare to their employees, and state exchanges will offer the same to individuals of small businesses via subsidies or credits. But the road to health care reform was not for the feint-hearted, as evidenced by the events that unfolded as it evolved.

American history is replete with inaccuracies expounded by its Presidents. In 1945, President Harry Truman said an atomic bomb was dropped on Hiroshima because it would inflict only limited civilian casualties; the tally of 140,000 was almost all civilian. President Nixon in 1973 notified a skeptical public the he “was not a crook;” less than six months later, the IRS determined he owed over $400,000 in back taxes. And President George W. Bush assured us that weapons of mass destruction were stockpiled in Iraq; they are yet to be found.

More recently, during election campaigning, soon-to be President Obama touted that he would change Washington’s penchant to rely on lobbyists, special interest groups and other less than constituency-based methods of passing legislation. However, even a cursory review of the pharmaceutical industry’s maneuvering leading up to health care reform reveals it will take more than campaign rhetoric to quell such antics.

Some historical perspective on health reform is in order. Implemented in 2006, Medicare Part D provided prescription drugs to Medicare recipients. It also included a provision that restricted Medicare from even discussing the reduction of prescription rates with the pharmaceutical companies. During then 2008 election campaign, Mr. Obama and other Democratic candidates for the Oval Office sought to overturn this restriction, permit Americans to purchase their prescriptions from developed countries such as Canada and increase the use of generic drugs in Medicare and other public health programs.

The eventual President revealed his personal health care plan would find savings up to $2,000 per person by eliminating inefficiencies; prescriptions were to be a major part of those savings. This position effectively placed a bull’s eye on the pharmaceutical companies, and placed them directly in the cross hairs when President Obama assumed office. But far be it for the pharmacy industry to acquiesce to the wishes of the President of the United States.

Instead, the Pharmacy Research and Manufacturers of America (PhRMA) went on the offensive, albeit discretely. Enter one Billy Tauzin. This ex-congressman from Louisiana had been singled out by candidate Obama as the individual who drafted the Medicare Part D legislation prohibiting Medicare from negotiating rate reduction for drugs. Only months after Medicare Part D became law, Mr. Tauzin resigned his position in Congress and assumed the helm at PhRMA. His salary was reportedly $2 million a year.

Subsequently, it became the prime objective of Mr. Tauzin to protect the interests of PhRMA from Washington’s lawmakers. The lobbyist machine for his industry was oiled with funding to the tune of $26 million as reported by the Center for Responsive Politics and put into motion to persuade elected officials to see health care reform from its distinct myopic viewpoint.

Forty-seven separate lobbying groups were hired by PhRMA to present their case to congressional targets. This figure does not include in-house employees who ramped up the pressure. Recipients fromPennsylvania in the House of Representatives included Allyson Schwartz (D-13) with $93,472, Patrick Murphy (D-8) $78,550, Jason Altmire (D-4) $74,721 and Tim Murphy (R-18) $67,000. Pennsylvania’s Senators also received donations: Arlen Specter (R) $182,200 and Bob Casey (D) $50,250.

The Center reports PhRMA was assisted in their endeavors by contributions of $14.6 million from individuals and another $15 million from political action committees or PACs.

To help move things along, two non-profit organizations were formed in April, 2009 under PhRMA’s watchful eye to promote health care reform efforts through the media: Healthy Economy Now and Americans for Stable Quality Care. A sum of $24 million was appropriated to convince the public of the merits of health care reform. The contract for these services was awarded to AKPD Message and Media. Daniel Axelrod, a senior advisor to the President, was one of the founders of AKPD that still employed his son and owed him $2 million at the time. This same company also performed work on Mr. Obama’s presidential campaign.

The result of the blood, sweat, tears and mostly money of the pro-pharmacy contingent is interesting, if not troubling. In June, 2009, Max Baucus, the Senate Finance Committee Chairman appointed as the point person by President Obama for all health care reform discussion, announced that the pharmaceutical industry had “agreed” to cost cutting in the amount of $80 billion. The money earmarked $20 billion for an expanded rebate for medicines used by Medicaid, $28 billion for a new fee on drug firms and about $30 billion for additional funds to close the “doughnut hole,” prescriptions not covered by Medicare Part D. It was later learned the powerful and persuasive pharmacy contingent had convinced Baucus to step down to the $80 billion figure from the $100 billion he had initially proposed.

But PhRMA et al. actually fared better with their $80 billion concession than might otherwise be expected. Offsetting this figure are the tens of billions of dollars in additional revenue to be realized from the estimated 32 million previously uninsured individuals who will become eligible for prescription coverage either through employers or yet to be established state exchanges.

Mitigating losses from funds allotted for Medicare Part D prescriptions are federal subsidies which, in turn, translates into more elderly patients buying drugs.

And perhaps most remarkably, similar to when heavyweight Buster Douglas knocked out Mike Tyson, PhRMA, KO’d all hopes of the Democrats’ ability to negotiate lower prescription costs under Medicare, import drugs from other countries and permit generic drugs to be used by Medicare and Medicaid.

Pennsylvania residents deserve affordable health care. But, we should be aware of the price that was paid for it as well as the alliances, deals and bedfellows that were borne of its creation.