Originally posted at Liberal Street Fighter
Suckling profits from the very life’s blood of people in the Third World wasn’t enough for multi-national Pharmaceutical companies. After all, there is a growing population of poor to exploit here:
The pharmaceutical industry is beginning to reap a windfall from a surprisingly lucrative niche market: drugs for poor people.
And analysts expect the benefits to show up in many of the quarterly financial results that drug-makers will begin posting this week.
The windfall, which by some estimates could be $2 billion or more this year, is a result of the transfer of millions of low-income people into the new Medicare Part D drug program that went into effect in January. Under that program, as it turns out, drug-makers are in a position to charge higher prices for the drugs given to those people than when their medicines were covered under federal-state Medicaid programs for the poor.
The details, and the huge sums of money that will be paid out to these already obscenely profitable and greedy industry are stunning:
It is too early to calculate the full effect of the shift of the former Medicaid patients now covered by Part D. But analysts expect it to generate hundreds of millions of additional dollars this year for the drug companies, which have long chafed under the pricing restraints of the state programs.
Drugs tend to be cheaper under the Medicaid programs because the states are the buyers, and by law they receive the lowest available prices for drugs.
But in creating the federal Part D program, Congress – in what critics saw as a sop to the drug industry – barred the government from having a negotiating role. Instead, prices are worked out between drugmakers and the dozens of large and small Part D drug plans run by commercial insurers.
Since Part D went into effect, the pharmaceutical industry has raised the wholesale prices of its brand-name drugs an average of 3.6%. Although the actual amount spent depends on what each insurer negotiates, in many cases the drugs for those 6.5 million people who used to receive their medicines through Medicaid will cost more now.
Initially, the added costs will be paid by the insurers administering the new Medicare drug program. But when it comes time for the insurers to settle accounts with the government, the costs of the drugs for the 6.5 million transferees will end up being passed along to federal taxpayers, according to analysts and health care economists.
The windfall for the drugmakers was made possible by a provision of the 2003 Medicare law that exempts Part D drugs from “best price” rebates that the drugmakers have been required to give to the state Medicaid programs since 1991.
This isn’t purely a Republican boondoggle. Certain Democrats were only too happy to help Big Pharma clean up.
Lieberman dutifully recites his opposition to “tax cuts for the rich” and “privatizing Social Security,” and his support of “universal health insurance” and “affordable healthcare.” When he utters those phrases, unfortunately, they ring hollow to many rank-and-file Democrats.
Actually, the syndrome afflicting him is found among entrenched veterans of both parties, especially those who appear more concerned with connections and contributions than values or ideals.
Sen. Lieberman has long been known to cultivate the insurance and pharmaceutical industries, which provide jobs in his home state and contributions to his campaign fund. But he has literally been sleeping with one of their Washington representatives ever since his wife, Hadassah, joined Hill & Knowlton last year. The legendary lobbying and PR firm hired her as a “senior counselor” in its “health and pharmaceuticals practice.”
This news marked Hadassah Lieberman’s return to consulting after more than a decade of retirement. “I have had a life-long commitment to helping people gain better health care,” she said in the press release announcing her new job. “I am excited about the opportunity to work with the talented team at Hill & Knowlton to counsel a terrific stable of clients toward that same goal.”
We are a deeply sick people, so blinded by our belief in the so-called “free” market that we place business plan and profits before human life, we allow needless suffering so that some few will reap large rewards. We participate in this badly broken system, and continue to support politicians who serve only to make it worse.
It’s sick.
