Bait and switch: How the “public option” was sold

By Kip Sullivan
Physicians for a National Health Program
July 20, 2009

When the “public option” campaign began, its leaders promoted a huge “Medicare-like” program that would enroll about 130 million people. Such a program would dwarf even Medicare, which, with its 45 million enrollees, is the nation’s largest health insurer, public or private. But today “public option” advocates sing the praises of tiny “public options” contained in congressional legislation sponsored by leading Democrats that bear no resemblance to the original model.

According to the Congressional Budget Office, the “public options” described in the Democrats’ legislation might enroll 10 million people and will have virtually no effect on health care costs, which means the “public options” cannot, by themselves, have any effect on the number of uninsured. But the leaders of the “public option” movement haven’t told the public they have abandoned their original vision. It’s high time they did.

For reform advocates, the full article is a “must read”:
http://www.pnhp.org/blog/2009/07/20/bait-and-switch-how-the-“public-option”-was-sold/

What a mess.

The progressive community has really blown it. The decision was to make “choice” the rallying cry for comprehensive reform – choosing to keep the insurance you have if that’s what you want, or to choose a program like the members of Congress have. It seemed not to matter that the public didn’t understand that FEHBP was basically an exchange of private plans offered to government employees, much less how a Medicare-like program might play a role.

That decision secured a solid role for the private insurance industry in any comprehensive reform proposal. All the industry had to do was to be certain that any government option could not be an effective competitor to the private industry, and they have done just that. AHIP has already destroyed the original concept of the public option, although they continue to chisel away at what vestiges remain.

Although an effective public option is a dead issue, the opponents of social insurance are not finished. They have successfully blocked action before the August recess which will allow time to build opposition to some of the remaining elements of the reform proposals.

Perhaps the most important policy in the legislation is the provision of subsidies for the purchase of private plans. If health care is to be affordable, these must be very large subsidies for a very large number of people. But Congress is at an impasse on how to pay for them.

The principles of social insurance require a transfer from the wealthy since low- and moderate-income individuals can no longer pay their full actuarial share. Yet Republicans and conservative Democrats have blocked the tax surcharge on high-income individuals, pulling out one more plank from the platform of social insurance.

Another source would be to tax employer-sponsored plans, but that would threaten losing this important source of health care financing and coverage. Many in Congress recognize that this is a risk that cannot be taken under the current model proposed by the legislation. Unions are particularly concerned that employees would face unacceptably higher costs, so this tax source has been rejected.

Since the private insurers would gain the most by this legislation, some are suggesting that we should tax them. But those taxes would be passed back to us in the form of higher premiums, which would then require still higher subsidies.

Congress has selected the most expensive model of health care reform. When they go home on their break the anti-tax forces will be out in full strength to communicate loudly that we can’t pay for it.

In September, they will face the reality that the subsidies will have to be smaller and the eligibility thresholds lower than currently proposed, simply because they can’t find the revenues to pay for them. There is an easy fix for that, as President Obama stated. We’ll have to issue hardship waivers which will exempt us from the fines that would be assessed for not having the insurance that we can’t afford.

Even there, the number of hardship waivers that would have to be issued has been grossly underestimated. With a typical family income of $60,000 and average family health care costs of almost $17,000, the majority of Americans should qualify for a waiver.

You really should read Kip Sullivan’s article. He shows us that there still is hope. As he states in his article, “at this late date in the 2009 session, it is unlikely that a single-payer bill could be passed even if unity within the universal coverage movement could be achieved. But if the ‘public option’ wing and the single-payer wing join together to demand that Congress enact a single-payer system, December 2009 need not constitute a deadline.”

Submitted by Margaret Flowers, MD (Maryland PNHP)

On Saturday morning, July 11, 2009, advocates for a Single Payer Healthcare system hit the streets of northeast Baltimore looking to pick up support, via signed Petitions, for their cause. The canvassing area covered “Rodgers Forge,” which is an historic community located just north of the city line, and south of Towson.

Together with an individual mandate described in the last post, an employer mandate is an essential part of all legislative health care reform proposals now being considered in Congress. The House bill requires employers with payrolls larger than $250,000 to contribute 72.5 percent of health insurance premium costs for full-time employees and 65 percent for families. The current Senate proposal calls for employers to pay at least 60 percent of premium costs for their full-time employees. Employers with annual payrolls of more than $400,000 would be penalized for non-compliance by paying a payroll tax up to 8 percent of wages (House bill) or $750 for each full-time worker and $375 for each part-time worker (Senate bill).

Employer-sponsored health insurance (ESI) dates back to World War II when the nation rapidly mobilized to a wartime economy. Facing a severe labor shortage and needing a healthy work force, employers had to compete for workers by offering higher pay and health benefits. IRS rulings freed employers from taxes on the costs of health insurance, and these benefits were not taxable for their employees.

We now have an almost 70 year experience with ESI, and that method of financing U.S health care has been steadily unraveling. Employers today are spending an average of about $10,000 a year for health coverage for each employee with a family of four.  Premiums have gone up by 120 percent for ESI since 1999, nearly triple the rate of inflation and six times cumulative wage growth. Only three in five large employers now offer any kind of health care coverage, and many are cutting back or eliminating retiree health benefits.  Smaller employers are abandoning ESI at a rapid clip.  National surveys have found that the proportion of small businesses offering coverage dropped from 61 percent in 1993 to just 38 percent today.

So are employer mandates good health policy?  If we base that answer on history and their track record, instead of ideology and wishful thinking, we have to say no. Employer mandates will not give us an effective way to control health care costs, which will only become a bigger burden on employers and make them even less able to compete in a global economy. Taking General Motors as an example, it has had to spend about $1,500 per car for health care, hardly competitive with manufacturers across the border in Toronto that spend one-fifth of that amount on health care within the Canadian single-payer system.

Employer mandates have been tried for many years in a number of states, and have never resulted in universal coverage or cost containment. The longest experience has been in Hawaii – 30 years – where initial gains in coverage later reverted to growing numbers of uninsured and higher health care costs. Later experiments with employer mandates, often combined with individual mandates, have been carried out in California, Connecticut, Massachusetts, Maine, Minnesota, New Mexico, Oregon, Vermont, and Wisconsin.

Over the years, employer mandates have usually been opposed by the business community, including conservative market advocates and the Chamber of Commerce.  In the current debate over reform proposals, the business community is increasingly vocal in its opposition to the cost and burdens of an employer mandate.  Flash points in the debate now focus on whether ESI health benefits should be taxed and what exemptions ought to be extended to small business.

Forty percent of the private U.S. labor force works for employers with fewer than 100 employees, who are represented by the National Federation of Independent Business (NFIB). The small employer market is one of the most profitable markets for private insurers, but small employers find insurance premiums increasingly beyond their reach.  According to the Kaiser Family Foundation, premiums for single workers in small businesses climbed by 74 percent between 2001 and 2008. Not surprisingly, the NFIB is very concerned about the impacts of reform proposals in Congress. There is a basic economic truism that will come into play — make the purchase of something mandatory and its cost will rise, if only because the seller knows the buyer must but it.

What American business desperately needs is containment of its health care costs and a healthy work force in order to compete in the 21st Century.  It will not get that from “reforms” now being debated in Congress. If enacted after political compromises with the major corporate stakeholders, a bill will likely make the plight of American business, as well as the broader public, even worse.

Ironically, the goals of health care reform — cost containment, universal access, and improved quality of care — can be met by a paygo option, single-payer national health insurance, which would provide universal coverage and cost less than what employers and the public are paying now.  But since that option would reduce corporate profits in a runaway market system, it is still not being considered by most politicians, beholden as they are to corporate money.

John Geyman, M.D. is the author of The Cancer Generation and Do Not Resuscitate: Why the Health Insurance Industry is Dying, and How We Must Replace It, 2008 by John Geyman. With permission of the publisher, Common Courage Press

Buy John Geyman’s Books at: http://www.commoncouragepress.com

We’ve been here before. With much fanfare, health insurance mandates were enacted by Massachusetts in 2006 and touted by many as an effective model to reform health care. After three years’ experience, here is what the “Massachusetts Miracle” tells us about mandates and their costs.

• only about one-half of the previously uninsured now have some coverage.
• The public “Connector” established to implement the program has added another layer of 4 to 5 percent overhead without enough leverage to rein in costs of private insurers.
• As health insurance and out-of-pocket health care costs take up 15 percent or more of their family income, many people still forego needed care because of  costs.
• the State has had to exclude many people from the program, the cost of  subsidies (for those earning up to three times the federal poverty level) are much  higher than anticipated, and the costs of health care continue to soar out of control (Massachusetts pays one-third more per person than the national average).
• In its budget crisis since the Fall of 2008, in order to keep the program going, the State has had to cut safety net programs, including providers, emergency rooms, primary care, and chronic mental health services; and coverage of legal immigrants will soon be eliminated.
• In order to try to get a handle on soaring costs and overutilization of health care, the State is now considering a plan to radically change how providers and hospitals are paid, eliminating the customary fee-for-service system and replacing it with some kind of risk-adjusted global payments.

Mandates are not a new idea.  They have been tried in a number of other states, including California, Oregon, Pennsylvania and Maine. The results in Maine are no better than they are in Massachusetts.  As a state with a large rural, poor and elderly population and an economy based on small business, employer-based insurance coverage is limited.  The State enacted a law in 2003 with the goal of covering all 130,000 uninsured residents by this year.  It has also failed:
• the plan now covers only a small fraction of the target population.
• the State had to cap enrollment due to financing problems.
• Most private insurers have left the state, and the dominant insurer has priced coverage in the individual market beyond the reach of most uninsured.

So we already know that mandates don’t work as well as their supporters claim.  They have not resulted in universal coverage in any state.  They are complex, very expensive, not sustainable, and have unforeseen unintended consequences.

Yet an individual mandate that requires all, or nearly all, uninsured Americans to purchase health insurance is a basic part of all the proposals now being developed in Congress. Government subsidies will be provided for people below specified federal poverty levels, and those who still cannot afford insurance will be exempted. Under the House bill, a family of four earning less than about $88,000 a year won’t have to pay insurance premiums that take up more than 11 percent of their income.  Individuals will be penalized by fines if they do not have at least a minimal level of coverage. The current House and Senate bills vary a bit on the penalties (eg. 2.5 percent of adjusted gross income over $18,700 for a couple in the House version and up to $750 a year a person a year in the Senate version).  Many other details lurk in the fine print.

The basic goal of a 2009 health care reform package is to address the problem of 46 million Americans without health insurance through a combined mandate on individuals and employers. The current House bill will cost $1 trillion over 10 years, but will still leave 36 million Americans uninsured, according to the CBO.

Based upon the poor performance of mandates in all states in which they have been tried, why is it that policy makers, politicians, and most stakeholders still support the concept of mandates? The basic answer, of course, is money.  Insurers see nearly 50 million new enrollees, many subsidized by the government. The drug industry sees new profits for its products.  Hospitals and physicians foresee many previously uninsured patients becoming insured. And many legislators benefit from corporate money flowing into their future campaign war chests.

Based on substantial experience at the state level, we can anticipate that “reforms” based on mandates will be very expensive (for both patients and taxpayers), add even more bureaucracy and complexity than we now have, fail to control costs and still not provide much additional access to care. In sum, if enacted as these bills are shaping up, these “reforms” will be policy failures but another bonanza for the medical-industrial complex.  In the next post, we will look at the other mandate — the employer-based mandate — to ask whether that makes any sense.

John Geyman, M.D. is the author of The Cancer Generation and Do Not Resuscitate: Why the Health Insurance Industry is Dying, and How We Must Replace It, 2008 by John Geyman. With permission of the publisher, Common Courage Press

Buy John Geyman’s Books at: http://www.commoncouragepress.com

News Conference

President Barack Obama
The White House
July 22, 2009

Question: …is this bill going to cover all 47 million Americans that are uninsured…?

President Obama: I want to cover everybody. Now, the truth is that unless you have a what’s called a single-payer system in which everybody is automatically covered, then you’re probably not going to reach every single individual…

There might still be people left out there who, even though there’s an individual mandate, even though they are required to purchase health insurance, might still not get it, or despite a lot of subsidies are still in such dire straits that it’s still hard for them to afford it, and we may end up giving them some sort of hardship exemption.

http://www.whitehouse.gov/the_press_office/News-Conference-by-the-President-July-22-2009/

Yes, but… why would hardship exemptions ever be preferred to automatic coverage of everyone under single payer?

Centrists Win Backing on Medicare Cost Cuts

By Greg Hitt and Naftali Bendavid
The Wall Street Journal
July 22, 2009

Democratic centrists said they won a tentative commitment from the White House to back a proposal to curb the growth of Medicare costs, as party leaders braced for a vote next week on health-care legislation.

One proposal pushed both by President Barack Obama and some centrists is to give the executive branch the authority to implement cuts to Medicare spending that would be recommended by independent experts. Congress could stop the cuts, but only if it acted swiftly. Fiscal conservatives say that under the current system, which gives Congress more power, lawmakers shy away from politically tough votes to restrain Medicare costs.

After a more-than-two-hour meeting at the White House Tuesday, centrists said they secured a verbal commitment to add such a mechanism on Medicare cost-cutting to the House bill.

White House budget chief Peter Orszag was among those at the meeting, and said the mechanism was a big focus of discussion. He said adding it would alleviate the concerns of fiscally conservative “Blue Dog” Democrats. “I think it’s probably the most important piece that could be added to the House legislation,” he said.

http://online.wsj.com/article/SB124822098850870337.html?mod=googlenews_wsj

And…

IMAC, UBend

By Peter Orszag, Director
Office of Management and Budget (OMB)
July 17, 2009

… one of the most potent reforms is a change in the process of health care policymaking: empowering an independent, non-partisan body of doctors and other health experts to make recommendation about Medicare payment rates and other reforms.

Today, the Administration sent a letter to congressional leaders outlining our support for this approach, with a proposal for an Independent Medicare Advisory Commission (as well as Senator Rockefeller’s similar proposal to accomplish this through the existing MedPAC) to detail how one might accomplish this goal.

The Independent Medicare Advisory Council (IMAC) would be an independent, non-partisan body of doctors and other health experts, appointed by the President, confirmed by the Senate, and serving for five-year terms. The IMAC would issue recommendations as long as their implementation would not result in any increase in the aggregate level of net expenditures under the Medicare program; and either would improve the quality of medical care received by the program’s beneficiaries or improve Medicare’s efficiency.

http://www.whitehouse.gov/omb/blog/09/07/17/IMACUBend/

And…

OMB proposed legislation to create IMAC

Short Title
This Act may be cited as the “Independent Medicare Advisory Council Act of 2009.”

(The four pages of the proposed act describe the establishment of the Council, its authority to make annual Medicare payment updates, and its authority to recommend Medicare reforms.)

http://issuu.com/thenewrepublic/docs/section-by-section_analysis?mode=embed&viewMode=presentation&layout=http%3A%2F%2Fskin.issuu.com%2Fv%2Flight%2Flayout.xml&showFlipBtn=true

And…

Report to the Congress: Improving Incentives in the Medicare Program

Medicare Payment Advisory Commission (MedPAC)
June 2009

In this report, the Commission:

* describes Medicare’s role in graduate medical education and offers future directions;
* examines ways accountable care organizations could affect the growth in service volume;
* lays out principles for reporting resource use to physicians so they can actively and collaboratively participate in appropriately constraining service volume;
* provides new information on the role of self-referral in imaging use and the effect of imaging use on Medicare cost growth;
* explores ideas to ensure that pricing for follow-on biologics produces value for Medicare;
* examines restructuring Medicare’s benefit design to provide beneficiaries with better incentives and protections;
* analyzes various aspects of Medicare Advantage payment, fulfilling a requirement mandated by Section 169 of the Medicare Improvements for Patients and Providers Act of 2008; and
* discusses care management for beneficiaries with chronic conditions, as required by Section 150 of the Medicare Improvements for Patients and Providers Act of 2008.

Entire “Report to the Congress” (299 pages):
http://www.medpac.gov/documents/Jun09_EntireReport.pdf

And…

Providing Better Health Care For Less Money

By Julie Rovner
NPR
July 22, 2009

An even larger problem is that while there is relative consensus that Medicare’s current payment system encourages doctors and hospitals to provide too much of the wrong care, no one is quite sure how to revise it to encourage just the right amount of care.

“I guess the way I would put it is even if I was a benevolent dictator for a day, I wouldn’t feel comfortable at this point, given the state of knowledge, completely overhauling the Medicare payment system,” said White House Budget Director Peter Orszag, who has been studying the issue for several years.

That has led to a conundrum in lawmakers’ efforts to try to achieve long-term savings in the health care system. They know that overhauling Medicare payments is a key means to achieving that goal. They also know that if they do it wrong, they could leave the health care system — and the patients it serves — worse off than it is now.

http://www.npr.org/templates/story/story.php?storyId=106875583

There has been intense interest in providing the administration with greater control over Medicare spending in order to bend down the trajectory of projected increases in spending. Members of Congress and the administration have been considering an Independent Medical Advisory Council (IMAC) much like the Medicare Payment Advisory Commission (MedPAC), but with one very important difference.

Currently MedPAC serves only in an advisory capacity to Congress, and any recommendations must be specifically enacted by Congress. Under this proposal, IMAC would have the power to put into force these recommendations, with the approval of the President. Congress’s power would be limited to the ability to reject, by a joint resolution of Congress, the intact, full package of IMAC reforms and updates.

To get an idea of what IMAC might be able to accomplish in controlling spending through independent decisions, we might look at an example of a MedPAC function that was enacted by Congress. The Sustainable Growth Rate (SGR) was a sincere effort to slow the increases in aggregate physician payments by making adjustments based on 1) changes in physician fees, 2) changes in the number of Medicare beneficiaries, 3) change in GDP per capita, and 4) changes due to new laws or regulations. This seemed to be a very reasonable approach that was fair for physicians and fair for taxpayers.

What was not anticipated was the degree to which physicians would increase the frequency and intensity of services. Growth in imaging services was especially problematic. This resulted in a measured excess growth in aggregate physician payments, with calculations requiring a reduction in physician payments, now for several consecutive years. Each year, Congress has overridden the scheduled reductions, but the deficits have been carried forward. This is the source of the $245 billion excess deficit scored by the CBO but that the administration and Congress don’t count because they were going to give it back anyway.

This is not a criticism of the intent of the SGR adjustments. It merely demonstrates an example of how the MedPAC/Congress interaction has not been nearly as effective in slowing Medicare cost increases as had been hoped.

Imagine if MedPAC had already been converted to IMAC. Look at the report MedPAC released last month on the recommendations to improve incentives in the Medicare program. Now imagine that these recommendations were accepted by the President and placed into effect.

As only one example in this 299 page report, value-based insurance design is discussed as a method of motivating patients to consider value by varying the amount of patient cost-sharing based on the value of the service or product. Think about the difficulties they would have in attempting to accomplish that. Then imagine such a policy becoming the national standard merely on the action of one committee and the stamp of approval of the President. Scary.

An Independent Medical Advisory Council might have some legitimate role in our dysfunctional multi-payer system, but no matter how noble the recommendations, it cannot begin to correct the severe deficiencies in both our health care financing and our health care delivery system. To do that it would take the fundamental structural reform of a single payer national health program.

The Blue Dogs have demanded an IMAC or independent MedPAC, and the amendments are being prepared to include the concept in the tri-committee legislation. It will be yet another patch on a financing framework that is structurally unsound. Those still wanting to move the proverbial deck chairs around need to be reminded of the condition of the framework of the Titanic.

As July starts to wind down and the August recess by Congress fast approaches, the debate over health care reform enters a late stage with increasingly bitter partisan differences over very divisive issues. Every day we hear about more Democrats siding with the Republicans, especially the Blue Dogs worrying about the high costs of plans on the table. Senate leaders are threatening that higher taxes and the public option will be deal-breakers. With President Obama pressing both parties for an early resolution of their differences, the hope for a bipartisan bill this year is rapidly fading. Each day brings new terms into the debate, ranging from triggers to exchanges and coops, without enough details or track record to gain our confidence that any real reform is on track.

As the debate gets more heated and polarized, confusion increases among the public. Not surprising, especially since that is the goal of stakeholder disinformation campaigns. Since the stakes are enormous — health care being 17 percent of our economy — market stakeholders are pulling out all the stops in their lobbying and advertising efforts to make sure that their markets aren’t bothered too much.

Individual mandates are part of the proposals being developed in both the House and Senate. Employer mandates can also be expected from the House and (except for small employers) from the Senate. The Senate’s Committee on Health, Education, Labor and Pensions (HELP) recently approved, by a party-line vote of 13-10, a proposal that would stop the ability of insurance companies from denying coverage based on pre-existing conditions and provide a public option for those unable to find an insurance plan. The House proposal calls for an individual and employer mandate, a public option, various attempts to offer guaranteed coverage and insurance market reforms, a government-run insurance exchange, graduated surtaxes on those making more than $350,000 a year, and government subsidies for those with incomes up to 400 percent of the federal poverty level ($88,000 for a family of four). Tax credit support is being considered by Senate committees for those with low to middle incomes.

The most intense disagreements are now whether (and how robust if included) a public option will be in “keeping the insurance industry honest”, changes in tax policies for employers and employees, the cost of a reform bill, and how and who will pay. After a charm offensive in recent months by the major corporate stakeholders — insurers, business, PhRMA, hospitals, and the AMA — which included voluntary pledges to save up to $1.5 trillion over ten years, most are now starting to backtrack on what were never solid or enforceable commitments. And now we are starting to see a circular firing squad forming up among the stakeholders intended to shift more risk to other stakeholders. For example, business organizations are describing the employer mandate in the more than 1,000 page House bill as a job-killer by requiring employers to pay a fee or penalty of 8 percent of wages and increasing the costs of hiring a new worker.

So doesn’t all that give us hope that health care reform is just around the corner? Unfortunately, no. All of these proposals are based on faulty assumptions:
• We are asked to assume that the private health insurance industry is worth preserving, that it offers increased choice, that its products offer better value, that it best fits our culture; all of these claims have been discredited by its track record, as documented by my recent book Do Not Resuscitate: How The Health Insurance Industry Is Dying, and How We Must Replace It.
• There is nothing in these various proposals that can rein in uncontrolled inflation of health care costs; they lack significant cost containment mechanisms; they relate only to federal spending on health care, not total health care spending or that which patients will pay; the costs of government subsidies are not clear, and the costs of expansion of Medicaid have not even been scored by the Congressional Budget Office (CBO).
• The non-partisan CBO today gives us the following sobering assessment of costs: “In the legislation that has been reported, we do not see the fundamental changes that would be necessary to reduce the trajectory of federal health spending by a significant amount and, on the contrary, the legislation significantly expands the federal responsibility for health care costs.”

So while we are getting assurances from the President and some legislators
that this year’s health care reform effort is on track, there is growing evidence that it will soon leave the track when and if an actual bill emerges from Congress.

You might think that the current legislative debate draws from health policy science. We do have such a science, with a substantial literature of what works and what doesn’t, but that knowledge is unfortunately not driving the debate. Instead, the debate goes forward based on unfounded ideology, corporate money and influence. Subsequent posts will examine some of the elements of the reform effort in more detail.

John Geyman, M.D. is the author of The Cancer Generation and Do Not Resuscitate: Why the Health Insurance Industry is Dying, and How We Must Replace It, 2008 by John Geyman. With permission of the publisher, Common Courage Press

Buy John Geyman’s Books at: http://www.commoncouragepress.com

Biotech firms lobby for say on healthcare

$66m effort to protect drug-patent exclusivity

By Lisa Wangsness
The Boston Globe
July 21, 2009

The 46 million Americans without health insurance are probably not spending much time thinking about how Congress should curb monopolies on expensive biotech drugs. But the issue, which offers a case study in the ways of Washington influence, is among dozens that have spurred a lobbying frenzy this summer as Congress debates a historic healthcare overhaul.

Pharmaceutical interests alone, including many from Massachusetts, spent more than $66 million on lobbying in just the first quarter of this year, up 25 percent from last year, according to the nonpartisan Center for Responsive Politics.

Biotech firms produce the most expensive drugs on the market, charging $10,000 to $100,000 a year for a single patient, and generics would seriously undercut those prices. In their quest to win a 12-year exclusivity period for their drugs, free from such competition, biotech companies have launched a massive education campaign about what they say are the sky-high research and development costs involved with bringing them to market.

To help carry the message, they are paying well-connected lobbying firms, sponsoring radio ads as well as academic studies, and contributing to the campaign coffers of influential lawmakers.

“You get one crack at it,” said Robert Coughlin, president of the Massachusetts Biotechnology Council, speaking of the task of drawing up a licensing system for “biogenerics.” “If it isn’t done right, it could literally put the biotech industry out of business.”

The quest for influence is not always obvious.

Howard Dean, the former Democratic Party chairman, wrote an opinion piece this month in The Hill, an influential Capitol Hill newspaper, arguing that fewer than 12 years of monopoly rights for biotech companies’ products “would prematurely rob innovators of their intellectual property and . . . destroy incentives to develop new cures.”

Within hours Joe Trippi, a Democratic consultant who ran Dean’s 2004 presidential race, hyped Dean’s opinion piece in a blog post that he sent to The Huffington Post, a widely read website. “He’s a doctor and lifelong advocate for health reform – he knows what he’s talking about,” Trippi wrote, urging readers to contact their lawmakers.

Dean failed to note in his editorial that he is an adviser to McKenna, Long & Aldridge, a global law firm that is advising the Biotechnology Industry Organization, the influential trade group. Nor did Trippi mention that his public relations firm handles social media projects in a partnership with the Boston public relations company Brodeur Partners, which also has BIO as a client.

Dean said his editorial was part of McKenna’s rapid-fire response to an unexpected, eleventh-hour Senate health committee proposal (which biotech firms ultimately fought off).

“It was a huge scramble, all hands on deck,” Dean said.

The legions of lobbyists, strategists, and legal consultants involved include former senior aides to key lawmakers and executives. Top biotech companies are clients of Foley Hoag, a law firm with offices in Boston and Washington, which has deployed Nick Littlefield, former staff director and chief counsel for Senator Edward M. Kennedy’s health committee, and Paul Kim, the former deputy health counsel to the Kennedy’s committee.

Biotech won a major battle last week when Kennedy’s Senate health committee gave biotech firms the 12-year protections they wanted, plus six months for pediatric versions. The committee rejected a proposal by Senator Sherrod Brown, Democrat of Ohio, for a much shorter monopoly period. After the vote, generics companies said they wouldn’t even bother trying to make generic biologics because the 12-year protection would make the enterprise unprofitable.

“The pharmaceutical industry, especially the biotech industry has an awful lot of power in the halls of Congress,” Brown told reporters.

State leaders from around the country, including Governor Deval Patrick, wrote letters to their delegations supporting a biotech-friendly bill. CEOs have flown to Washington to drive their points home. The Globe reported earlier this year that Amgen donated $1 million to the Edward M. Kennedy Institute for the United States Senate at the University of Massachusetts Boston, a project being developed by people close to the senator but not Kennedy.

In the health committee vote last week, a number of other left-leaning Democratic senators sided with the industry, including Patty Murray of Washington, Barbara Mikulski of Maryland, Jack Reed and Sheldon Whitehouse of Rhode Island, and Kay Hagan of North Carolina. Kennedy supported the measure by proxy.

Hagan, a freshman senator whose state is home to a biotech sector, was assigned to the health committee this winter. Few were surprised when she cosponsored the industry-friendly amendment. But biotech firms were not taking chances: In the first half of this year, they poured $16,000 into her campaign account. Hagan believes the protections are necessary to support research for new drugs.

http://www.boston.com/news/health/articles/2009/07/21/biotech_firms_lobby_hard_for_say_on_healthcare/

July 14 qotd on the 12-year data exclusivity amendment:
http://www.pnhp.org/news/2009/july/senate_help_amendmen.php

The vote on the data exclusivity amendment was covered in a qotd last week, at the link above. More background information is provided by Lisa Wangsness in her Boston Globe article. Because of the implications for the reform process unfolding in Washington, we are taking a second look.

Having a twenty year patent on a biological that can command a one hundred thousand dollar price tag is not enough for the biotech firms. They also want a 12 year lead time before competitors can begin to use the data, produced in our academic medical centers, for developing new innovative drugs or even generic equivalents. This doesn’t change the 20 year patent exclusivity, but it requires future competitors to wait 12 years before beginning their research that would be based on the existing data.

That slows future innovation and research. It slows the introduction of generics that can result in competitive pricing. It decreases the chance of breakthroughs that could replace a one hundred thousand dollar biologic with a two hundred dollar product that might be more effective and less toxic.

Watching the prolonged committee deliberations on the 12 year data exclusivity amendment, it was obvious that the arguments presented by the senators in support of this amendment had been written by the biotech lobbyists. It was also obvious that only a few of the senators had rejected the lobbyists’ overtures.

The Boston Globe article demonstrates that this was not about policy, but about process. It shows how the most powerful lobbyists can cast their nets and pull in the best of them.

Howard Dean was a part of the “all hands on deck” scramble to support the data exclusivity amendment. It was simply a job that he was expected to do as part of the McKenna rapid-fire response team.

It was particularly painful to watch Senator Dodd, acting chairman of the Senate HELP Committee, cast an aye vote by proxy on behalf of Sen. Ted Kennedy, even though Sen. Dodd had already cast a no vote on his own behalf. It would be unfair to speculate what may have caused Sen. Kennedy to communicate his wishes on that vote, but it is likely that Amgen feels that they paid a million dollars for that vote, fair and square.

Does anyone else agree that we need a fully transparent re-start on reform?

July 17, 2009

The group here in DC (visiting PNHP members and interns) has done many visits to Congressional offices this week. Most have been with the health legislative aides (LA’s) who vary in their backgrounds and experience. A few are new and need basic information on single payer but most are quite knowledgeable of the issues. A few even have health profession backgrounds. We have generally had good interactions with the LAs, who have expressed a lot of appreciation for our visits. One does get the impression that the LAs have an important role with their bosses. It also seems that interest in single payer is increasing over the past few days.

Yesterday we met with LAs and two Representatives. One of the Representatives came out of a committee that is marking up the House bill agreed with us that the main objective in the long run is to make health care a right, and that we need single payer reform, but he saw no way to get further than the current proposal now. In the committee, the Republicans were using delaying tactics, taking 5 minutes each for each of the 50 plus amendments, and making absurd statements.

I have been impressed with the grassroots movement for single payer across the country. Our message has been that single payer reform is necessary because the for-profit insurance industry will always be able to game the system to their advantage. While the Congress is increasingly aware that grassroots support for single payer is massive and growing, a major problem continues to be the huge distribution of money from the industry to politicians and organizations that have subverted and compromised the present reform movement. While our movement lacks their deep pockets, we have the support of the public. So it was nice to end the week with a victory for single payer: Representative Kucinich’s amendment to allow states to adopt single payer programs passed the Education and Labor committee today. While we have a long way to go before we have a single payer health care system at the state or national level, this was a start.

- Submitted by George Pauk, MD

We just learned that the Illinois House of Representatives adopted a resolution on May 31st, 2009 urging Congress to pass The United States National Health Insurance Act (HR 676) which would provide universal comprehensive health care coverage to all residents of the United States. The resolution, sponsored by Rep. Mary Flowers, acknowledges that “Americans already pay more per capita than any other nation nation for health care, almost twice the amount of other industrialized nations” yet ranks 37th in health care system performance.

The resolution was passed as a direct result of a highly successful lobby day in Springfield in March, 2009 hosted by Physicians for a National Health Program and National Nurses Organizing Committee. Over 300 citizen activists attended including Claudia Lennhoff of Champaign County Health Care Consumers, Donna Smith of National Nurses Organizing Committee and many patients, doctors and other health professionals. Many gave testimony at the legislative hearing regarding HR 311, the Healthcare for All Illinois Act sponsored by Rep. Mary Flowers, which would guarantee single-payer health insurance for every resident of Illinois.

Read more about the lobby day at the Champaign County Health Care Consumers website

Read the full text of HR 233