Tuesday, November 1, 2016

From the Fiscal Times: How Big Pharma Lobbyists Keep Medicare Drug Prices High

For our look at interest groups and iron triangles.

- Click here for the article.
For nearly a decade, veteran Democratic Rep. Peter Welch of Vermont has been waging a lonely battle to empower Medicare officials to negotiate the price of prescription drugs, just as Medicaid, the Veterans’ Administration and other government health care providers are entitled to do.

When Congress enacted the Medicare Part D subsidized prescription drug program for seniors in 2003, the drug industry secured an amendment that barred the federal government from negotiating rebates or lower drug prices for Medicare beneficiaries – a sweetheart deal that subsequently provided drug manufacturers with many billions of dollars in extra profits.

Welch, a liberal Democrat, condemned the restrictive policy as the ultimate in “crony capitalism” and sponsored or co-sponsored at least six bills to allow drug price negotiations.

But a well-financed drug industry thwarted Welch and his allies at every turn, and the proposed legislation repeatedly was bottled up in the House Energy and Commerce Committee, or simply ignored. He concluded that big-money lobbying efforts and generous campaign contributions to key Republican and Democratic lawmakers effectively blocked his legislation, even as many consumers and policy advocacy groups clamored for ways to control soaring prescription drug prices.

“It truly is exhibit A in the intersection between crony capitalism and big money in politics,” Welch said in an interview on Thursday. “The whole essence of a free market is that willing buyers and willing sellers can negotiate prices and reach a market price … How in the world can one explain that the government actually passed a law saying that you can’t negotiate prices?”

According to Welch and political watchdog groups, the answer is fairly simple. The pharmaceutical industry spent unprecedented sums on lobbying and campaign contributions to get the prohibition on price negotiations into the original legislation and to keep it there, despite the best efforts of Welch and others to eliminate the provision.

An analysis jointly published this week by the Center for Responsive Politics and FairWarning, a non-profit news organization, highlights the political clout exerted by the Pharmaceutical Research and Manufacturers of America (PhRMA), a major industry group, and some of the largest U.S. drug companies.

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