Congress vs. Big Pharma: Let the Games Begin

Doughnut holes, drug scams, and Dingell: As the industry cozies up to Democrats, pharma reform may be DOA for now ? but watch for a few killer investigations.

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With its stranglehold on the nation’s health care bills and its record-high profits, including billions from public coffers, no industry may be an easier target for reform than Big Pharma. But don’t hold your breath for any meaningful reforms from the next Congress, given that even the most obvious ideas — such as expanding the Medicare drug benefit and opening the door to drug imports from Canada and elsewhere — will face unrelenting pushback from the massive drug lobby. In the end, Congressional Democrats may not accomplish much to help patients, but they will likely launch the first serious investigations of the industry in decades. (The only pharma oversight effort in the past six years, led by Charles Grassley (R-Iowa) in 2004, focused on poor FDA oversight of drugs such as Vioxx).

In January powerful Michigan Democrat John Dingell will take the reins of the House Energy and Commerce Committee. Sources with knowledge of the committee’s plans say that by February, Dingell aims to launch several probes of the drug industry, including a look at fraud in Medicare and Medicaid with particular focus on the black-market sales of expensive cancer drugs and other pharmaceuticals. Dingell also wants to investigate the process by which drugs get approved at the FDA, and explore the question of imports from Canada, where U.S. drug makers sell many pharmaceuticals cheaper than they do here.

Other committees believed to be gearing up for investigations are the House Government Reform Committee (incoming chair Henry Waxman (D-Calif.) declined to comment on his plans), and Senator Ted Kennedy’s Health, Education, Labor and Pensions Committee, which now includes two freshmen who have made health care reform a major part of their campaigns — Sherrod Brown of Ohio, and Bernie Sanders, the Vermont independent.

The industry, in response, is beefing up its defenses, hiring new Democratic lobbyists, including several who were staffers from Kennedy and for House Speaker-elect Nancy Pelosi. And, reports the Washington Post, the industry is setting its sights on the elevation of Congressman Edolphus Towns (D-N.Y.) — best known as a major defender of the tobacco industry — to the chairmanship of the important health subcommittee of the House Energy and Commerce Committee, where he could help stall reform.

In whatever configuration, the issues the new Congress will have to confront right away include the new Medicare Plan D drug benefit program. The benefit is administered through various private plans run by HMOs, the AARP, and others, each of which negotiates its own prices with drug makers. Critics argue that as constituted, this program — the only part of Medicare that doesn’t include price controls — is a virtual handout to the drug companies, and that the government could push for much lower drug prices if it were to negotiate with manufacturers directly. A number of Congressional freshmen supported this idea on the campaign trail.

Another likely agenda item is Plan D’s so-called doughnut hole. A senior can register for the plan and receive coverage for up to $2400 worth of drugs. After that a senior continues to pay premiums but gets no coverage until he or she spends about $3800. Then the insurance picks up again.

Plan D is a miasma — the Bush people like to refer to it as a marketplace — of different private plans, some plugging the doughnut, some closing it part way. According to staffers at the Center for Medicare Advocacy in Washington, there is as of yet no real plan in Congress for plugging the doughnut or changing the overall plan. Edwin Park, who follows Medicare for the Center for Budget and Policy Priorities, a Washington think tank, says he doubts there will be any quick fixes for the doughnut hole, in part because of the cost of closing the gap — an estimated $400 million over 10 years. Bush is dead set against removing the marketplace feature and the Democrats, with their narrow margins, would have a hard time overriding a veto. Thus, some health advocates think that while Congress won’t allow the government to negotiate prices wholesale, they might let the government enter the Plan D market as another buyer alongside the existing private plans.

A second confrontation may come over the import of cheaper drugs from Canada. Democratic Senator Byron Dorgan of South Dakota has taken the lead on this issue; last July, Senate Democrats voted to permit Canadian imports. Bush has promised to veto such legislation, should it ever pass; meanwhile, the Canadian drug industry is preparing to press Ottawa to ban cheap exports to the United States, a move that would leave patients turning to Latin America and elsewhere.

“My main hope is exposure,” says Dr. Sidney Wolfe, who heads Public Citizen’s Health Research Group. Even if reform legislation were to pass in this Congress, he notes, “it would be almost guaranteed to face a presidential veto.” More likely, he says, investigations today will pave the way for reform later.

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