Medicare Drug Benefit Turns Into Bonanza for Big Pharma

It didn’t take a genius to figure out that Bush’s prescription drug plan – you know, the one that expressly forbids Medicare from bargaining over prices – was going to turn fairly quickly into a bonanza for Big Pharma, so I don’t imagine it will be much of a surprise to learn that that’s exactly what’s happening.

After some initial success containing drug prices, private insurers in the new Medicare prescription drug program may be losing their leverage over drug manufacturers as they try to hold down medicine costs for seniors and the federal government, House investigators have found.

Prices for 10 of the most prescribed brand-name medications have shot up an average of 6.8 percent since December under Medicare private insurance plans, while wholesale prices for the same drugs have risen just 3 percent, House Oversight and Government Reform investigators say. The cost of a month’s supply of cholesterol-controlling Lipitor had climbed 9.6 percent, to $84.27 in mid-April, from $76.91 in mid-December. Over the same time, list prices climbed 5 percent.

Premiums for Medicare drug plans have jumped 13 percent over the past year, when the drug plans went into effect, the investigators say.

And the rebates that insurance companies are wringing out of drug manufacturers are expected to total 4.6 percent of total drug costs, down from 5.2 percent last year. A year ago, Medicare actuaries had expected insurers in 2007 to secure manufacturers’ rebates of 6 percent, then pass those savings on to seniors and the government.

“Essentially as an economist this is just what I would have predicted,” said Marilyn Moon, director of the health program at the American Institutes for Research and a former trustee for Medicare and Social Security. “When you introduce a new program, with all of the fanfare, everyone is anxious to get the best prices, the best look and demonstrate the private sector can handle it. But over time, when you’ve gotten your customers lined up, prices tend to slip upward.”

Slip upward”? Slip?! They didn’t slip. They were pushed.

Economists and accountants always like to talk as if the market is a force of nature with its own rules that’s beyond any human’s control, but that’s bullshit. Actually Moon explains the problem quite competently if you put aside the force majeure thang: once a corporation’s got you hooked, it can abandon loss-leader pricing and return to its comfort zone – unrestricted greed.

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Bush Priorities: Iraq v. Medicare

Juxtaposing two articles, one from the NYT on Friday and the other printed in the WaPo yesterday, says pretty much all that needs to be said about what the Bush Administration thinks is important. From the WaPo:

President Bush will ask Congress for close to three-quarters of a trillion dollars in defense spending on Monday, including $245 billion to cover the cost of fighting in Iraq and Afghanistan and other elements of the “global war on terror,” senior administration officials said yesterday.

Democrats said the gigantic spending request will precipitate “sticker shock” on Capitol Hill, where lawmakers were already planning to scrutinize White House war-spending requests more zealously.

But on Friday:

President Bush will ask Congress in his budget next week to squeeze more than $70 billion of savings from Medicare and Medicaid over the next five years, administration officials and health care lobbyists said Thursday.The proposals, part of a White House plan to balance the budget by 2012, set the stage for a battle with Congress over entitlement spending. Even some administration officials say they cannot imagine approval of such large cutbacks in a Congress now controlled by Democrats.

Mr. Bush is also expected to propose changes in the Children’s Health Insurance Program to sharpen its focus on low-income families. The changes could reduce federal payments to states that cover children with family incomes exceeding twice the poverty level. Under federal guidelines, a family of four is considered poor if its annual income is less than $20,650.

For an illegal, pre-emptive war based on lies and greed, everything. Massive debt, death and destabilization? He’s for them. But for the poor, even poor children? “Go suck an egg.”

To quote Molly, this crowd is beyond belief.

Bernanke: Forget Iraq, It’s SocSec That’s Too Expensive

Fed Chair Ben Bernanke, whose apostasy once knew no bounds, has finally found religion. He’s joined the Church of Our Lady of the Deficit. After a couple of years of deficits climbing through the roof during which we heard not a peep from him about their effect on our financial future, Mr Bernanke is suddenly concerned. Very concerned.

Federal Reserve Chairman Ben S. Bernanke warned Congress yesterday of a “fiscal crisis” if it doesn’t curb the projected growth of federal spending on retirement and health-care programs.Echoing similar warnings by his predecessor, Alan Greenspan, Bernanke told the Senate Budget Committee that “the effects on the U.S. economy would be severe” if the government’s debt were allowed to balloon as forecast.

Hmmm. Why this sudden switch?

Bernanke noted that the federal deficit has declined –

Whoa, old horse. Declined? Declined??? Whose numbers is he looking at, France’s?

in the past two years but said that was “the calm before the storm” of skyrocketing expenses for an aging population. He cited Congressional Budget Office projections that spending on the big entitlement programs — Social Security, Medicare and Medicaid — will equal 15 percent of the nation’s gross domestic product by 2030, double last year’s level. (emphasis added)

Mr Bernanke is patently NOT concerned about the enormous amount of money being spent in Iraq (an estimated $$$1.2 Trillion$$$), and the even more enormous amounts about to be spent if the Congress doesn’t call a halt to Bush’s new “plan”. That gigantic pool of $$$$ isn’t a strain on the budget even though we’re borrowing it. In fact, it apparently isn’t even included in his definition of “deficit” since he doesn’t mention it.

No, what exercises Mr Bernanke’s worry cells is the possibility that social programs like Soc Sec and Medicare might cause a “fiscal crisis”. Continue reading

Friday Slime: Medicare Premiums Jump a Record 17%

In a move that reeks of cynicism and Fuck You arrogance, the Bush Administration on the Friday afternoon of the Labor Day weekend released the news that due to their (deliberate) mismanagement of Medicare, not only is the deductible going up by 10% but premiums are going to be raised next year by a whopping 17%, marking an overall 30% hike in seniors’ medical costs in addition to the hidden hike in the cost of prescription drugs that the Bush Administration rammed through Congress last year to make its pharmaceutical-industry contributors happy.

Bush administration announces the increase for 41.8 million disabled and elderly beneficiaries as the capital empties for the holiday weekend.

By Johanna Neuman, LA Times Staff Writer

WASHINGTON — In the largest increase in the history of Medicare, insurance premiums paid by elderly and disabled patients for routine care will rise 17% next year, the Bush administration said Friday.

The premium increases announced late in the afternoon as the capital emptied for the three-day Labor Day weekend and Republicans wrapped up a jubilant week at their convention in New York — would affect nearly all of the 41.8 million beneficiaries of Medicare.

The boost from $66.60 to $78.20 a month is the largest increase in the program’s 40-year history. The premiums are for Medicare Part B, which provides Medicare patients with coverage for physician services, outpatient hospital care, certain home health services and durable medical equipment.

In announcing the $11.60-a-month increase, the government said the higher premiums reflected general growth in healthcare costs, higher payments to doctors and Medicare modernization.

“The new premiums reflect an enhanced Medicare that is providing seniors and people with disabilities with strengthened access to physician services and new preventive benefits,” said Dr. Mark McClellan, administrator of the federal Centers for Medicare and Medicaid Services.

Advocates for elderly and disabled beneficiaries said the extra costs would burden many of those who rely on the program.

“This is going to make it even harder for a lot of older Americans to make ends meet,” said Robert M. Hayes, president of the Medicare Rights Center. “Already there are a lot of older people who are teetering on the edge of poverty.”

Critics pounced on both the timing and content of the administration’s announcement, which seemed designed to garner as little publicity as possible.

“This is a cynical attempt to bury bad news by leaking it out when you hope no one is watching,” Rep. Pete Stark (D-Hayward) told Associated Press. “This administration has had four years to improve Medicare and instead have made it worse. Today’s news reflects the reality, not rhetoric, of this administration’s bad record on Medicare.”

The announcement became an instant campaign issue, with a spokesman for Sen. John F. Kerry, the Democratic presidential challenger, saying that the jump in premiums came after the administration increased deductibles by 10%.

“After doing nothing about the record increases in the cost of healthcare over the last four years, George Bush is presiding over a Medicare system that is socking seniors with the largest premium hike in the program’s 40-year history,” said spokesman Phil Singer. “When it comes to helping seniors, George Bush has proven that he’s taking us in the wrong direction by giving billions to the drug industry while keeping seniors from accessing cheaper prescription drugs.”

(emphasis added by me)

Private Health Insurers Balk at Bush Privatization

The soft underbelly of Junior’s blazing desire to kill Medicare (which he derisively labeled ‘socialized medecine’ in his younger days) by privatizing it has always been his assumption that private insurers wanted all of Medicare’s business. In point of fact, they don’t–they want to cherry-pick the profitable Medicare population and let the unprofitable one go fry. This week, they let him know how unhappy they are.

Insurers Object to New Provision in Medicare Law
By ROBERT PEAR

Published: NYT, August 22, 2004

WASHINGTON, Aug. 20 – A major obstacle to the success of the new Medicare law has emerged in recent weeks: private insurers have told the Bush administration that they will not expand their role in Medicare if they have to serve large multistate regions, as the White House wants.

Congress sharply increased payments to private health plans last year in the hope that they would serve many more Medicare beneficiaries.

But the Blue Cross and Blue Shield plans, the backbone of the nation’s private health insurance system, and other insurers said it was not feasible for them to establish networks of doctors and hospitals spanning large regions like New England or the Midwest.

They want the government to designate 50 regions, one for each state. That is the preference stated emphatically, in separate letters to the Bush administration, by the Blue Cross and Blue Shield Association and by America’s Health Insurance Plans, the chief lobby for the health insurance industry.

A White House document describing President Bush’s ideas for overhauling Medicare in March 2003 proposed “large multistate regions,” and it included a map showing 10 sample regions.

Large regions will force health plans to serve rural areas that they have historically shunned, administration officials say. Under this logic, if a health plan wanted lucrative Medicare business in Chicago and its suburbs, it would have to serve rural Illinois and Iowa and perhaps Nebraska as well.

But Alissa Fox, policy director for the Blue Cross and Blue Shield Association, said, “The only way to assure vibrant competition and expand choices for beneficiaries is to establish 50 state-based regions.”

If the administration insists on multistate regions, Ms. Fox said, “it will be virtually impossible for most private plans to be ready for 2006,” when drug benefits and new insurance options are supposed to become available. The level of financial risk increases with the size of a region, she said, so insurers will need more capital and larger reserves to operate in a multistate region.

Diana C. Dennett, executive vice president of America’s Health Insurance Plans, said her group also “strongly supports establishment of 50 regions.”

Private plans will be discouraged from participating in Medicare if they have to get insurance licenses and sign contracts with doctors and hospitals in nearby states where they have never done business, Ms. Dennett said.

“In many rural areas,” she said, “providers are unwilling to contract with Medicare managed care plans,” even at the rates paid by the traditional fee-for-service Medicare program.

Several private plans are available to Medicare beneficiaries in the Boston area, for example. But, health policy experts say, those plans do not have contracts with doctors and hospitals in remote parts of New England.

The new Medicare law envisions a huge role for private plans, starting in 2006. If beneficiaries stay in traditional Medicare, they can get subsidized drug coverage by buying private insurance policies that cover prescription drugs and nothing else. Alternatively, they can join a preferred provider organization or a health maintenance organization that covers drugs along with doctors’ services and hospital care.

The government must decide by Jan. 1 how to define the regions. Insurers say the configuration of regions will have a major effect on whether they participate.

Given that the health care industry (if you include pharmaceutical companies) is Junior’s second biggest contributor after energy and that they’re making a blatant attempt to blackmail the Bush Administration in an election year, I’m taking bets on how long it will be before the rule is changed to sell rural areas down the river and give the industry what it wants. But I gotta tell yah, anything over a month is a sucker bet, and anything over a week or two is going to have long odds. Your call. (I was going to bet that the rule change change would be announced on a Friday afternoon, but at this point that’s a gimme.)

FITE: Drug Companies Rip Off Seniors

Newsletter #31

We met a truck driver, Bob, about a year ago in the course of our campaign against state budget cuts. “How are you doing?” we asked. “I’m doing OK, but my Mom’s not.” He explained that “Since the budget cuts have started, she isn’t eating.” And, he added, “What good are meds if she can’t afford to eat?”

Hoping the new Medicare cards proudly trumpeted by the Bush people would get her eating full meals again, we asked Bob last week how his mother was doing. He said he had just visited her the day before, and there still wasn’t much food in her refrigerator.

We later found out the reason. According to AARP, the nations largest advocate for seniors, the drug companies started raising the prices of the drugs most used by seniors much faster than usual just before Medicare cards were introduced. The result is that seniors like Bob’s mom, the ones most in need of the discounts, will get no benefit whatsoever. Meanwhile, the seniors who can afford supplementary insurance will help to fatten even more the coffers of the drug companies.

A percentage of these seniors will die prematurely, constituting part of the 18,000 deaths each year of people without health insurance.

Meanwhile, drug companies will make out like bandits they are, making profits that are the envy of the Fortune 500. They will reinvest little of their profits in new drug development. Hundreds of them in the industry invested so little in research that all of them together produced only 7 genuinely new drugs last year.

Instead, they invest in what are, in effect, bribes. These bribes, called “campaign contributions” in the nation’s press, can earn up to 30,000% return on investment. Seventy drug companies paid $5 million dollars for the right to sell the discount cards. In addition, the drug barons of the drug industry bribe doctors to prescribe drugs that are more expensive but no better than the older and cheaper drugs.

And of course these drug barons got an ample share. These CEOs “deserved” it, of course, for the hard work they put into arranging the discount card fraud. Including the value of stock options, many of these embezzlers make well over $100 million a year, which works out to more per HOUR than the average worker makes in a YEAR.

By the way, as of this writing, we heard that Bob’s mother has just been rushed to the hospital.

Charles Palson

—————-

Sources and further reading:

“Study Blames 18,000 Deaths in USA on Lack of Insurance,” Steve Sternberg, USA Today

“AARP: Drug Prices Jumped in Early 2004,” Mark Sherman, AP

“The Truth About the Drug Companies,” Marcia Angell

“Investigators Say Drug Makers Repeatedly Overcharged,” Robert Pear

So are we all shocked and surprised? This is why the bill was written the way it was: drug company lobbyists wrote it, the AARP–which is now bitching about it–supported it, and the Republican Congress dutifully passed it. It was a brilliant piece of stealth legislation, hiding its real purpose behind a ‘compassionate’ front that Junior will campaign on as if it were real, naturally.

People, we have got to stop letting ourselves be suckered like this. We got tricked into a bill that pretends to help seniors pay for their drugs when what it really does is let the drug industry make a lot more money by forcing Bob’s Mom and millions like her to choose between medication and food. We need to start catching these tricks before they become law, not after.

One for Our Side

U.S. to Drop Benefit Cuts Linked to Drug Discounts
By ROBERT PEAR

Published: NY Times, June 13, 2004

WASHINGTON, June 12 – The Bush administration said Saturday that it would rescind a federal policy that threatened to cut food stamp benefits for several million low-income elderly and disabled people who save money on their medicines by using the new Medicare drug discount cards.

The administration’s reversal came two days before President Bush was scheduled to visit Missouri to promote use of the cards, which have received a tepid reaction from many Medicare beneficiaries.

In interviews this week, state officials across the country said low-income people who used the cards could find their food stamp benefits reduced as a result. The cuts, they said, were a direct result of federal regulations and a policy statement issued by the Agriculture Department on March 10.

The purpose of the discount cards is to reduce out-of-pocket drug costs. But when a person’s drug expenses go down, state officials said, the food stamp program assumes that the person has more money available to spend on other needs, including food. So the person may receive a smaller food stamp allotment, they said.

Judy K. Toelle, the food stamp director in South Dakota, confirmed that such cuts would occur under the federal rules. For example, she said, a woman with monthly income of $1,060, shelter expenses of $555 and drug costs of $325 now receives $51 a month in food stamps. But, she said, if the card reduced her out-of-pocket drug costs by $100, the woman would get $41 less in food stamps, so the net saving would be $59.

Food stamp officials in California, Colorado, Missouri , New Mexico and Washington State said they were simply following federal rules in reducing food stamp benefits to take account of the fact that people with discount cards spent less on prescription drugs. Those regulations have not been changed.

But after inquiries from The New York Times, Eric M. Bost, an under secretary of agriculture, said, “We will immediately be clarifying policy guidance to ensure that food stamp applicants or recipients who use the new Medicare discount card will experience no impact on their eligibility or benefits.”

The abrupt shift highlights the confusion between federal and state officials, and between the two federal agencies that administer Medicare and food stamps.

‘Confusion’? The only confusion is that Bost, the guy who thinks hunger shelters are shopping centers for suburban Moms, forgot that Bush was trying to get re-elected on the old ‘compassionate conservative’ ploy. So somebody reminded him.

Elections are good for stuff like this.