The Great Health-Care Heist

After all, there was ample evidence that U.S. consumers were being gouged. For example, in France, which negotiates prices, Eli Lilly and Company charged patients $47 for a one-month supply of Cymbalta, a medicine used to treat depression and anxiety. The cost in America was $176.

"We shouldn't have ever called it a public option. We should have called it 'Medicare for all.'"

Pfizer charged Canadians $53 for Celebrex, an anti-inflammatory pain-killer. The bill for Americans: $162.

In one TV ad, Obama blistered Tauzin for the kind of inside corruption that's made Washington famous.

Senate Minority Leader Mitch McConnell's home state of Kentucky has one of the most successful state co-ops, Kynect, which grabbed 60 percent of the market. McConnell, ironically, helped sabotage co-op funding in 26 other states.
Gage Skidmore/Creative Commons
Senate Minority Leader Mitch McConnell's home state of Kentucky has one of the most successful state co-ops, Kynect, which grabbed 60 percent of the market. McConnell, ironically, helped sabotage co-op funding in 26 other states.
Occupy Wall Street protestors at Pfizer's world headquarters in New York. The pharmaceutical giant benefits from the government's inability to negotiate a better price for their drugs. Canadians pay about a third less for Pfizer's Celebrex than their American counterparts.
Michael Fleshman/Creative Commons
Occupy Wall Street protestors at Pfizer's world headquarters in New York. The pharmaceutical giant benefits from the government's inability to negotiate a better price for their drugs. Canadians pay about a third less for Pfizer's Celebrex than their American counterparts.

"The chairman of the committee, who pushed the law through, went to work for the pharmaceutical industry, making $2 million a year," Obama announced to the camera, his sleeves rolled up for action. "That's an example of the same old game-playing in Washington. You know, I don't want to learn how to play the game better; I want to put an end to the game-playing."

A year later, he would find that game not so unpleasant after all.


After he became president, Obama would indulge Tauzin in the same closed-door dealings he once lambasted. The drug industry agreed to taxes and rebates involving $80 billion in savings over ten years. In exchange, Obama welshed on three crucial promises: to speed generics to market, to allow the importation of cheaper drugs, and to retain the right to negotiate Medicare drug prices.

Senator Bill Nelson, a Democrat from Florida, was among several congressmen who tried unsuccessfully to maintain negotiation rights. He proposed a bill that would have forced drug companies to match prices offered to other government programs (Medicaid, Veterans Administration) that do negotiate.

"I'm not here picking on PhRMA," Nelson said at the time. "I just think, philosophically, that Medicare patients shouldn't be paying more than Medicaid beneficiaries."

But three Democrats — Senator Baucus and senators Robert Menendez of New Jersey and Tom Carper of Delaware — teamed with Republicans to ensure that Nelson's bill was stillborn in committee. They were more interested in keeping their word to the drug makers than in their duty to the American people.

"A deal is a deal," Carper explained.

A less-noticed provision gave pharmaceutical companies the right to extend patents on biologic drugs to twelve years — compared to the five years that conventional drugs receive. This may prove to be the greatest budget-buster of them all.

Biologics are the industry's new cash cow. They're more difficult to manufacture because they're grown rather than chemically assembled. This is the pretext for setting prices 22 times higher than those of ordinary drugs. Some prescriptions cost as much as $100,000 annually.

"Unfortunately, both the administration and leadership felt they should put a moratorium on Medicare being able to buy in bulk and access generic drugs," says Democrat Congressman Raúl Grijalva of Arizona. "In doing so, they locked in a price scheme that is many times out of control. That concession was painful to many of us, because we allowed the fox to control the henhouse."


Congress and the administration also repeatedly balked at the most direct route to lower prices — greater competition — even though much of the country was without it.

An American Medical Association study found that one insurer controlled more than half the market in 30 states. "In Alabama, almost 90 percent is controlled by just one company," Obama told a crowd in 2009. "And without competition, the price of insurance goes up and quality goes down."

Hit the hardest were rural residents, typically poorer and less healthy than the rest of the country. Metro areas offered the greatest profit, so big insurers and hospital groups had little incentive to compete for nickels and dimes in the countryside. Absent competition, premiums and hospital prices soared.

Many Democrats pushed for a public insurance plan, which would compete with companies like Aetna for customers. But Republicans rallied to insurers, claiming it was unfair to make them compete with government. Never mind that they represented some of the most unhealthy and least competitive stretches of the country, particularly in the South.

"We shouldn't have ever called it a public option," says Kentucky congressman Yarmuth. "We should have called it 'Medicare for all,' and then people would have been for it, because 'public option' was too vague."

Senator Kent Conrad, a North Dakota Democrat, proposed a compromise by creating nonprofit insurance co-ops to compete with monopolies and provide coverage to rural areas. Actuaries suggested that $10 billion in grants would be enough to get co-ops started in every state. Yet the marionettes in Congress began to strip away their effectiveness almost immediately.

Senator Ben Nelson, a Democrat from Nebraska, is a former insurance exec and one of the wealthiest members of Congress, withheld his vote unless the grants were changed to loans, making sure the co-ops were saddled with debt from the beginning.

Others sneaked in measures barring the co-ops from competing for the more lucrative business of large employers and banned them from using the government loans for marketing. It was as if Congress merely wanted fig-leaf competition while quietly sabotaging any chance to actually compete.

The $10 billion in loans was continually sheared away. Democrats repeatedly agreed to deals with Senate Minority Leader Mitch McConnell to strip the money away.

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