Unintended Consequences
Readers know the two blockbuster reasons pharma chained itself to GOP reps during the design of Medicare Part D: the bill's language prohibits the government from negotiating for price, and a drug benefit kills efforts to legalize drug reimportation from Canada.
What if I told you there was another reason?
Many drug companies ran charitable donation programs (read: gave their drugs away for free) for the disabled and elderly.
For decades, drugmakers have offered discounted or free medications to uninsured Americans or people who could not afford critical therapies. In 2004, the 37 companies in the industry donated 22 million prescriptions worth $4.1 billion, said Ken Johnson, senior vice president for the Pharmaceutical Research and Manufacturers of America.
Now that there's a prescription benefit, companies see their out from that $4.1 billion.
And they're taking it.
Worse yet, the Bush Administration is essentially forcing them to do so:
Drugmakers blamed the Bush administration for issuing a legal opinion that suggests companies could run afoul of anti-kickback laws if they provide free drugs to Medicare beneficiaries. That guidance, from the Health and Human Services Inspector General's office, warned that providing free medicine to someone enrolled in a Medicare plan could be viewed as an effort to keep the patient on that particular product, rather than a generic or cheaper version sold by a competitor.
That's mighty convenient, eh? The Administration not only arranged massive profits and contracts for pharma, but they made up a rule saying that free pharmaceuticals are "suspicious". Unbelievable.
Kate. I don't think so.
The $4.1 billion is the retail value of these drugs, which as we know is massively marked up from their manufacturing costs (and I mean massively!). It costs the companies virtually nothing to provide them for free. And some will keep doing so.
They were plenty happy with the bill as it was, as you say because it pre-empted a much nastier bill that allowed price negotiation by a monopsony -- as happens everywhere else in the world.
February 2, 2006 10:59 AM | Reply | Permalink
I realize this is merely anecdotal evidence and it's quite trivial compared to the bigger problems with this mess, but I find it a bit ironic that Big Pharma apparently managed to screw up their relationship with one of their best customer populations. These are mostly people who need a lot of prescription drugs, could afford, and used to have a private prescription drug plan. Is anybody better off under this new plan?
February 2, 2006 2:48 PM | Reply | Permalink