Re: A Prescription for Plutocracy


"k sturm" <kasturm@xxxxxxxxxxxxx> wrote in message
news:mO8jj.36748$lD6.356@xxxxxxxxxxxxxxxxxxxxxxxxxxxxx
A Prescription for Plutocracy
Is Washington hopelessly gridlocked? Not when the rich and powerful need
help. The latest evidence: the just-released official analysis of the
first full year of the new Medicare prescription drug benefit.
January 14, 2008

By Sam Pizzigati

Imagine yourself the CEO in an industry that has been registering record
profits year after year - mainly by overcharging consumers for products
they feel they literally can't live without. But suddenly you find
yourself with a problem: Your products have simply become too costly for
consumers to afford.

So what do you do? You convince lawmakers to plow billions of taxpayer
dollars into a program that will help consumers pay for your overpriced
products. Problem solved. You can now, as a certified CEO genius, look
forward to years of windfall rewards.

This scenario sound far-fetched? You haven't been paying attention. This
scenario has actually just unfolded - in the pharmaceutical industry.

Big Pharma, as the industry has become less than affectionately known,
entered the 21st century the most profitable industry in the world. In
2002, notes Harvard Medical School analyst Marcia Angell, the top 10 drug
companies in the United States netted more earnings than all the rest of
the companies in the Fortune 500 taken together.

Big profits like these translated into hefty paydays for top Big Pharma
executives. In 2001, the five most lavishly compensated drug company execs
averaged over $30 million each. Three Big Pharma execs entered that year
with at least $131 million worth of stock options they hadn't yet cashed
in.

The fuel for these big earnings: revenues from outpatient prescriptions
that were rising at a remarkable 15 percent annual rate. By 2002, 12 cents
out of every dollar Americans were expending for health care were going
for prescription drugs.

But no industry can sustain, over the long haul, such annual revenue
increases. For Big Pharma, the first big sign of trouble would come in
2003. In that year, after over two decades as Corporate America's most
profitable sector, the pharmaceutical industry lost its number one
profitability ranking, dropping to third place.

The industry would waste no time crying in its chemicals. In that same
2003, Big Pharma would team with the Bush White House to push through
Congress legislation that added a prescription drug benefit to the
Medicare program.

Seniors, the White House crowed, would finally have help paying for their
prescriptions.

This new Medicare legislation guaranteed all seniors eligibility for some
form of drug benefit by January 2006. But the legislation didn't guarantee
any decrease in prescription drug prices.

Indeed, the new law specifically prohibited any federal government action
to negotiate for lower prices directly with the drug companies.

"The key goal," notes Ron Pollack of the health care watchdog group
Families USA, "was to make sure there'd be no interference in the drug
companies' abilities to charge high prices and to continue to increase
those prices."

To safeguard this price-inflating provision, Big Pharma would spend the
next three years overrunning Capitol Hill with lobbyists and cash. Through
2005 and the first six months of 2006 alone, the Center for Public
Integrity reported last April, drug companies and their trade groups spent
$155 million on lobbying Congress.

Those dollars, the Center notes, unleashed an army of 1,100 paid lobbyists
on the House and the Senate - over two lobbyists, in effect, for every
Capitol Hill lawmaker.

On top of that, Big Pharma invested millions more in campaign
contributions, over $70 million in all from 1998 through June 2006 - and
spent even more millions ushering members of Congress into America's
economic elite.

In 2005, for instance, the industry's top trade association - the
Pharmaceutical Research and Manufacturers of America - named former
Congressman Billy Tauzin its new CEO. His pay package: a reported $2
million, over 15 times his take-home as a lawmaker.

These Big Pharma investments all paid off. Attempts to amend the 2003 drug
"benefit" legislation went nowhere. The legislation went into full effect
exactly as the drug industry wanted.

The results would be predictable. In 2006, overall outlays for
prescription drugs "accelerated for the first time in six years," soaring
8.5 percent.

An analysis of that increase, published last week by the U.S. Centers for
Medicare and Medicaid Services, hands all the credit to the new federal
Medicare benefit.

In 2006, $41 billion taxpayer dollars went toward underwriting the drug
benefit. Over the course of the year, the share of the nation's total
prescription drug costs paid by Medicare leaped from 2 percent to 18
percent.

In other words, an unalloyed victory for the drug companies. They can now
continue to overcharge with impunity. America's taxpayers have come to
their rescue.

The drug companies, not surprisingly, aren't exactly sharing their
new-found good fortune. In 2007, Fortune reported this past December, Big
Pharma deep-sixed over 30,000 jobs. The companies are busily outsourcing,
big-time, to China and India.

Drug company executives, on the other hand, continue to prosper. Wyeth CEO
Bob Essner, for one, pulled in over $32 million in 2006.

Other industry execs have fared even better. Pfizer CEO Hank McKinnell
exited his executive suite with a $200 million golden parachute in 2006.
Another Pfizer executive, executive VP Karen Katen, walked off with a $78
million "consolation prize" after she lost out in a bid to become
McKinnell's successor.

Last Monday, a day before the official release of the first Medicare
benefit analysis, a bipartisan band of nationally prominent former
lawmakers - mostly former U.S. senators along the lines of Sam Nunn and
David Boren - gathered at a conference in Oklahoma to lament gridlock in
Washington, D.C.

The nation's two parties, this illustrious group avowed, have lost the
capacity to solve problems.

Hogwash. Lawmakers in Washington, as the Medicare prescription drug
benefit story demonstrates so clearly, solve problems all the time. Rich
people's problems.

In a plutocracy, that's simply what lawmakers do.

http://www.cipa-apex.org/toomuch/articlenew2008/Jan14a.html

An excellent argument for not allowing Congress and the special interests
that control it from completely taking over the insuring and bill paying
aspects of health insurance.

OR


.

Relevant Pages

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    ... the first full year of the new Medicare prescription drug benefit. ... Imagine yourself the CEO in an industry that has been registering ... Pharma executives. ... action to negotiate for lower prices directly with the drug companies. ...
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  • Re: A Prescription for Plutocracy
    ... the first full year of the new Medicare prescription drug benefit. ... Imagine yourself the CEO in an industry that has been registering ... Big profits like these translated into hefty paydays for top Big Pharma ... action to negotiate for lower prices directly with the drug companies. ...
    (rec.music.gdead)
  • Re: A Prescription for Plutocracy
    ... first full year of the new Medicare prescription drug benefit. ... Imagine yourself the CEO in an industry that has been registering record ... Big profits like these translated into hefty paydays for top Big Pharma ...
    (rec.music.gdead)
  • A Prescription for Plutocracy
    ... full year of the new Medicare prescription drug benefit. ... Big profits like these translated into hefty paydays for top Big Pharma ... "was to make sure there'd be no interference in the drug companies' ...
    (rec.music.gdead)
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