Wednesday, November 01, 2006

Panic in Big Pharma

Drug Cartel's Pre-Election Jitters
Panic in Big Pharma


Few recent elections have been as critical for the drug industry as this one. And that's the reason The Wall Street Journal reports that "Assailed by Democrats, drug companies are pouring millions of dollars into close races, giving some Republicans a financial edge."

What is at stake is a financial windfall the size of which has never before been endowed on a single industry, courtesy of the current administration. And that windfall is coming from drugs for poor people.

By some estimates the windfall for the drug industry could be $2 billion or more this year, and it is the result of the transfer of millions of poor people into the new Medicare Part D program. Under this program, the prices paid by the taxpayer, for the medications given to those unable to pay for drugs, are likely to be higher than what was paid under the Medicaid programs.

This is a program embraced by the current administration, and by the drug companies and the insurance industry. They all work together. In fact, when I was a Vice President at Pfizer, (an adventure you can read about in my recent book, "The Whistleblower, Confessions of a Healthcare Hitman") I received a phone call from someone calling on behalf of the CEO, requesting that I pay $2,000 for a fund raising dinner for President Bush's reelection. So did many other employees, co-opted into supporting an administration they couldn't stand.

The Democrats have seen less money from the drug industry and House Democratic Leader Nancy Pelosi, has said that within the first 100 hours of taking over the House, she will help rewrite the prescription-drug benefit to take away most of the advantages it handed to pharmaceutical companies.

"It'll take five minutes" to make the biggest change of all--the proposal to let the government negotiate prices, Ms. Pelosi told a group of about 100 retirees in Sunrise, Fla., earlier this month, according to the Wall Street Journal. She said the benefit was a product of "corruption, putting pharmaceutical companies and HMOs first at the expense of America's seniors."

The Medicare Part D program, which forbids the government from negotiating drug prices, was initially such a mess that at least two dozen states had to take emergency action to help low-income people who could not get their medications under the program, which began Jan. 1. States were spending millions of dollars a day in such assistance.

And the program isn't very effective. Los Angeles Times claims that "a review by the Senior Action Network, a grass-roots advocacy group in San Francisco, found that Costco's prices on the top 100 drugs used by Medicare beat prices of all 48 plans in California in more than half the cases."

Meanwhile, "The net federal cost of the new benefit is projected to be $37.4 billion in 2006 and $724 billion from 2006 to 2015.

But the program is good for the drug companies, and the insurance industry. The Wall Street Journal reports that the "early winners" include large health insurers, who "have snagged roughly 15 million new customers and healthy government subsidies" under the program. The WSJ concludes, "By far, the biggest winner in the race to sign up seniors is UnitedHealth Group Inc., which has used an alliance with AARP to help it grab more than 3.9 million new customers."

And one person who has won more than anyone else is the former CEO of UnitedHealth, who was recently terminated due to his backdated stock options. Earlier this year those stock options were valued at $1.6 billion in unrealized gains. He and in some years at least 10 other top executives of the company frequently received options just before big run-ups in the company's share price, which had the effect of making the options more profitable than they otherwise would have been.

Meanwhile, the White House earlier this year conducted a dirty campaign to force seniors into the fold. According to the Boston Globe, "Thousands of Americans who order prescription drugs from Canada have received written notice that their medications have been seized, part of a US government crackdown on the cross-border discount trade."

The enforcement policy began Nov. 17, two days after the enrollment period for the Medicare program opened.

In conclusion, the current administration has done what this administration does best. Funnel money to already fabulously rich executives. And American taxpayers do what they do best--pay the bill. Meanwhile, our poor and our elderly are suffering. In fact, in a Washington Post-ABC poll less than a third of respondents said they were saving a lot, and 26% said they had seen no savings due to the Medicare Part D program.

Perhaps that shouldn't be surprising, considering that, according to U.S. Senator Herb Kohl, "those with drug costs below $810 a year will actually pay more than they do today if they sign up for the drug benefit. Seniors with drug costs of $5,000 will still pay almost $4000 themselves--almost 80% of the bill."

Hopefully a Democratic Congress can affect some of this.

But I'm a little bit too cynical to think much will change; after all, in our nation the only currency that talks is money.

Our democracy has been subverted by the New Robber Barons into a pure kleptocracy, managed by our sticky-fingered and unelected CEOs.

Peter Rost, M.D., is a former Vice President of Pfizer. He became well known in 2004 when he emerged as the first drug company executive to speak out in favor of reimportation of drugs. He is the author of "The Whistleblower, Confessions of a Healthcare Hitman." See:


MsMelody said...


Unfortunately, I think we shall find that "party" trumps the individual, even when the state of our current medical system has fallen to this current low. As always, money talks.

As detailed in Too Profitable to Cure, several years ago, a sympathetic Congressman (a member of the Diabetic Caucus) committed to help a group of needful diabetics who had seen their drugs withdrawn from the U.S. market. However, as election-time approached and Big Pharma (since we're talking INSULIN, you have to recognize the footprint of Eli Lilly) poured money into the opposition coffers, the support and assistance evaporated--even when his own child might have benefitted from his efforts.

An interesting exercise might be to check the contributions afforded to Diana DiGette (the Colorado representative heading the Diabetic Caucus) because her offspring is also diabetic?

Anonymous said...

An article published at Counterpunch (not mainstream press), impressive. For more indepth information about who gives to whom, and in what amounts; check out Here's a snapshot -

Counterpunch also ran a recent item on another 'whistleblower' of note -

Anonymous said...

I very much doubt there is real panic @ big pharma or anywhere else. According to Lou Dobbs @ what the voter will get this Tuesday is....the bird..!!

Whatever party, the big industries buy their insurance with them in advance; they "donate" to both parties, and there is no other choice. There are already problems noted with voting machines. I vote absentee, and this time I will need two signatures on my ballot, in addition to my own. A little inconvenience for the housebound and otherwise absent. We will need more than this election to shake things up.

It is a mistake to think that it is all about "labor". Everyone is now "labor". If I see a doctor and need to go to the hospital for tests, there are all sorts of set-ups. A.o. films are being made. It is nice for me as a patient, because I get exact and colorful printouts of invasive investigations, and the treatment is on time, professional, and more precise. The physician, however, also gets paid, in addition to his fee - by whom? -. The doctor becomes a cog in a commercial enterprise, therefore, no longer a professional, but "labor". And "labor" is easily replaced through outsourcing, which does not only go outwards from the U.S. into foreign territory, but in reverse as well. Pharmacists have already become salesclerks for JCPenney. We will all be in sales, and all be "labor". The "call to educate ourselves", therefore, as many have already experienced, is just a ruse. We become more and more educated "labor", and some very uneducated persons, with the right connections and money, will reap the benefits of our "labor", the kind we do at universities, and the kind we do in the workplace.

Anonymous said...

And have you heard that Pfizer is outsourcing their Rand D and production to China
and Taiwan? They want to start the process and have them finsh it. They are only against drug reimportation if
someone else is doing it.