Drug oligopoly windfall
According to a report from Democratic congressional staff for the Oversight and Government Reform Committee in the US Congress, major drugmakers received a $3.7 windfall over the past two years, thanks to the way that their lobbyists wrote the rules for Medicare reimbursement.
The bonanza comes from a shift in laws passed in 2006, which shifted six million Medicaid (the health plan for poor people) to Medicare (the health care plan for people over 65), in its Part D prescription drug coverage. That program, passed at in 2003, was notorious in not allowing for price negotiation between the government (the biggest market for a number of pharmaceuticals) and the big drug companies, something Medicaid is allowed to do. The result was a cost increase to taxpayers of 30 percent.
Committee chairman Henry Waxman is quoted as saying: "The drug manufacturers have been paid billions more for the drugs used by the dual eligible beneficiaries than they would have been paid if the dual eligible had continued to receive their drug coverage through Medicaid."
The biggest gainers included drug giants Johnson & Johnson, Abbot Laboratories, and Bristol-Myers Squibb, both of which took in hundreds of millions more than they had the previous year thanks to the changes.
Not surprisingly, committee Republicans, the Bush administration, and drug lobbyists all disagreed, praising the workings of the "free market." Free indeed, if you assume that buyers are not allowed to bargain with sellers by law. It's the kind of thing on the best lobbying can buy.
(Source: "Medicare Part D a boon for drug companies, House report says" Los Angeles Times, 11/25/08)
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