New profits for Big Pharma, estimated at $2 billion or more this year,
will come from the transfer of millions of low income and poor folks to Medicare’s
new Part D (for dumb) that went in effect in January 2006, as reported in The
New York Times.
Thanks to George Bush and Company, under Part D the prices insurers
will pay for medications given to poor and disabled people transferred from
Medicaid will be a hell of a lot higher than Medicaid would have paid, a program
created originally for the poor. Nice work, fellas. You’ve guaranteed
your 2006 campaign contributions.
In fact, some 6.5 million low-income old or disabled poor folks were shoveled
into the Part D Medicare program for drug coverage to provide this strong dose
of corporate welfare. Since all others needs of these recipients are still covered
by Medicaid, the transferees are called dual eligibles, as if they were being
given more, not short-changed in the long run.
The scam is that drugs tend to be cheaper under the Medicaid program because
the states and buyers receive the lowest available prices by law. And you may
remember, Bush wouldn’t allow Medicare to bargain with Big Pharma to get
the lowest possible prices. Why on earth would he want Medicare pay the higher
prices if not to line neocon pockets?
Ergo, since Park D (for even dumber) went into effect, Big Pharma has shamelessly
hiked prices of their brand-name drugs an average of 3.6 percent. Although the
actual amount spent relies on what each of the 81 Part D insurers work out,
count on costs for those 6.5 million dual eligible people’s drugs to go
up, and the difference being sucked up by federal taxpayers. Isn’t it
good to know DC is always thinking of us, and how they can pick our pockets
as well as the bones of the poor?
This particular piece of corporate welfare was brought to you by a provision
of the 2003 Medicare law that exempts Part D drugs, as mentioned, from “best
price” rebates. The drug makers have been mandated to give the state Medicaid
agencies those rebates since 1991. When smart people ran the government, those
rebates were meant to insure that state agencies got the every day low price.
With Medicaid, federal and state government paid more than $14 billion each
year for the drugs of those 6.5 million transferred recipients. Without the
best-price rebates, the bill would have been 25 percent higher, about $17.5
Now nobody’s sure what the complete drug tab will be for those people
shifted into Part D, though everybody knows it will be higher. Medicare, they
say, won’t have real numbers until it chews up hundreds of monthly reports
that the plans in the Part D web must file.
Nevertheless, the profits off the backs of dual-eligibles are already being
seen by Big Pharma, amounting to double-digit increases in specific drugs used
heavily by Medicaid patients. Like Lamictal, an antipsychosis drug from GlaxoSmithKline,
up 33 percent in sales to $305 million in just the first quarter. Seroquel,
an antipsychotic drug from AstraZeneca, zoomed up 29 percent to $590 million.
Sales of Plavix, a blood thinner from Bristol-Myers Squibb, were up 26 percent
to $850 million.
Lamictal and Seroquel are major drugs in the Medicaid programs, prescribed
for bipolar disorder and other mental health problems, not exactly minor issues.
Sadder, some two million of the people passed into Part D are both disabled
and younger than 65. More than half of them have mental health problems. I wonder
if there’s a correlation for a study right there. In fact, Medicaid patients
made up for 80 to 90 percent of the total market for these “high-end”
The Medicaid best-price rebates cut some 15 percent off Big Pharma's list prices.
California, New York and Maine managed even larger rebates. Now, with Part D,
price wheeling and dealing will be done by Medicare drug plans of all sizes.
In the true style of Bush administration circumspection, prices will be given
to Medicare, but under a lobbyist-touted provision they will be kept secret
to all others. That gives you a feeling of confidence, doesn’t it?
On top of that, the federal agency that oversees Medicare and Medicaid is requiring
that states return a total of $5.8 billion to Washington from federal funds
given to the Medicaid program. That’s the number that the agency estimates
states will be saving since they’re no longer providing drugs to dual-eligibles.
But the states regard these refunds as “clawbacks,” and do not
agree with the federal formula to arrive at the repayment numbers. Given the
administration’s history with fuzzy math, from Iraq budgets to the budget
deficits, not to mention tax cuts to the rich or the bogus claims of Social
Security bankruptcy, I would put my money on the states’ claims of “clawbacks.”
Nevertheless, surprise, surprise, the Supreme Court brusquely nixed hearing
a case filed by the the attorneys general of Texas and four other states that
sought to bury the repayment formulas as unconstitutional. The states' position
is that the federal formula is using higher drug costs that many Medicaid programs
have actually been spending. In other words, the feds are fudging the numbers
And so, here are Medicare and Medicaid government agencies nickel-and-diming
the states over monies for drugs for the poor, the aged, and disabled, while
the market for Part D dual-eligibles is looking swimmingly lucrative for Big
Pharma. And so take a minute and scream with me. Maybe DC will hear us: the
well-being of the most vulnerable is not the place to cut. Cuts should come
from the gluttonous military industrial complex and tax cuts for the rich (to
mention a few) that are sucking America’s blood dry. That’s my humble
prescription for a healthier society.
Jerry Mazza is a freelance writer living in New York City.
Reach him at firstname.lastname@example.org.
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