Peter Rost on the Drug Cartel's Pre-Election Jitters

Panic in Big Pharma

By PETER ROST, MD


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.

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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: http://the-whistleblower-by-peter-rost.blogspot.com/