Lobbying 101 - doing a bundle

Amgen Gets a Gift From Congress

For a disheartening example of how intense lobbying and financial contributions can distort the legislative process in Washington, consider what happened to the “fiscal cliff” bill approved three weeks ago by Congress.

Senators who play a major role in federal health care financing were happy to help Amgen, the world’s largest biotechnology company, evade Medicare cost-cutting controls by delaying price restraints on a class of drugs used by kidney dialysis patients, including Sensipar, a drug made by Amgen. That provision was inserted into the final fiscal bill by Senate aides. Many members of Congress did not know it was in the bill until just hours before it was approved.

Although other companies will benefit financially from that delay, Amgen, which has 74 lobbyists in Washington, was the only company to lobby aggressively for the provision. The delay will cost the Medicare program up to $500 million over a two-year period.

The disturbing details were revealed in a report by Eric Lipton and Kevin Sack of The Times on Sunday. The maneuvering to exempt these drugs undercuts a five-year effort to change the incentives used to pay for kidney dialysis care. Previously, Medicare had paid providers separately for the drugs and for administering dialysis treatment, a system that often encouraged overprescribing.

But, in 2008, Congress reversed the incentives by requiring Medicare to pay a singled, bundled rate for a patient’s dialysis treatment and related medications, starting in 2011. But certain oral drugs, including Sensipar, were given a two-year reprieve, to expire in 2014, from being included in that more cost-effective bundled system. The fiscal bill has now extended that exclusion for an additional two years.

Supporters of the delay — notably, Senator Max Baucus, a Democrat of Montana, who leads the Senate Finance Committee, and Orrin Hatch, of Utah, the ranking Republican on that committee — say it is needed to give the Medicare system and dialysis providers time to absorb other complicated changes in federal reimbursements for kidney care. But there is good reason to suspect other factors were involved as well. Both senators have political and financial ties to Amgen, as does Mitch McConnell, the Senate minority leader, who exerted great influence over the fiscal negotiations and praised the Medicare provisions.

A top aide to Mr. Hatch, who was involved in negotiating the dialysis delay, previously worked as a health policy analyst for Amgen. The current lobbyists for Amgen include former chiefs of staff for both Mr. Baucus and Mr. McConnell. And the three senators have received substantial contributions from Amgen’s employees and its political action committee since 2007 — almost $68,000 to Senator Baucus, $59,000 to Senator Hatch, and $73,000 to Senator McConnell.

Amgen’s strong influence prevailed even though it had pleaded guilty just weeks ago to marketing an anti-anemia drug illegally and agreed to pay criminal and civil penalties of $762 million, a record settlement for a biotechnology company.

This dreadful episode is a classic example of the power of special interests to shape legislation and shows how hard it may be to carry out the reforms needed to cut health care costs.

http://www.nytimes.com/2013/01/23/opinion/amgen-gets-a-gift-from-congress.html?ref=opinion