A Bill Only a Drug Maker Could Love

Surveying the political landscape after his victory in securing the Medicare reform package, President Bush must feel a tad disappointed. After all, he had hoped the bill would boost his image as the 2004 elections loom, especially among the elderly. Yet seniors -- despite the AARP’s stamp of approval -- have been singularly underwhelmed with Bush’s great accomplishment.

Most of them can do the math: In the end, the great reform of 2003 means about $800 annually in drug benefits to the typical Medicare recipient -- “peanuts” as one told a reporter last week. For anyone struggling on a fixed income, it’s an amount unlikely to make prescription drugs really affordable. Nor is it enough of a discount to make the comfortable classes rejoice.

So, why wasn’t it more? Congressional polarization explains part of it. Ditto budgetary realities. But at the heart of the measure’s failings is this fact: The pharmaceutical industry wields tremendous political clout.

Both the president and the GOP have actively courted pharmaceutical industry support. Court documents filed in connection with lawsuits challenging last year’s campaign-finance law show that in 1999 Jim Nicholson, then chairman of the Republican National Committee, wrote to the heads of several brand-name manufacturers. “We must keep the lines of communication open if we want to continue passing legislation that will benefit your industry,” he wrote. He then suggested the manufacturers join the committee’s “Season Pass” program for VIP benefits at the GOP convention -- for a mere $250,000 apiece.

The pharmaceutical industry has responded to such pleas with tons of cash -- about $50 million over the last four years, 79% of it designated specifically for Republican causes and candidates. The money has purchased enormous benefits for the industry. Hank McKinnell, chief executive officer of Pfizer Inc., has become the president’s virtual consigliere, flying on Cabinet-level missions and sitting alongside the president at economic conferences. And that’s just the beginning.

Consider the selection of Food and Drug Administration Commissioner Mark McClellan, who is fast making enemies of consumers in his desperate attempt to stigmatize imported prescription drugs. The trade organization Pharmaceutical Research and Manufacturers of America, PhRMA, played the leading role in making sure that the two most-qualified men for the FDA job were bumped in his favor. Dr. Alastair Wood and Dr. Raymond Woosley are among the most-respected names in pharmacology and drug regulation. Even the president initially favored one of them over McClellan. But according to Bert Spilker, a longtime executive at PhRMA and now a private drug industry consultant, “when we circulated a list of names among our members with the names of prospective candidates, it came back with exactly two names circled for elimination -- Wood and Woosley.” Pfizer then actively circulated an inflammatory anti-Wood essay from a conservative magazine to galvanize opposition. Wood, who had already gotten preliminary personnel office approval, was unceremoniously dumped. Woosley never got close.

Arguably, Wood or Woosley might also have made imports an issue, but their strong written records on drug safety and efficacy suggest that either of them would have made those concerns their strongest priorities rather than focusing on such obvious protectionism. McClellan has a modest publication record, made up mostly of articles on pharmo-economics. He has, however, been so anti-import -- a cause that McKinnell made a top concerns -- as to invite ridicule and defiance by a number of Republican governors, not to mention legions of traditionally conservative voters. (A note: Last week, even the cautious New England Journal of Medicine concluded that less expensive Canadian imports posed “no excess health risks for patients in the United States.”)

But nowhere has the industry been so effective as in its success in keeping price controls out of the Medicare prescription drug bill. In its budget for the current year, PhRMA allocated $72.7 million for “advocacy” at the federal level, mostly for lobbying Congress. Much of the group’s “advocacy” since then has been focused on ensuring that the Medicare drug bill didn’t allow the federal government to negotiate lower prices, something all other industrialized nations -- and almost all developing nations -- take for granted. PhRMA’s budget also earmarked $1 million to be spent on trying to “change the Canadian health-care system” and $450,000 for efforts to stop Internet sales of Canadian drugs to U.S. customers. Another $4.9 million was dedicated to lobbying the FDA. In Washington, there are now six drug company lobbyists for each U.S. senator.

And the industry isn’t just focusing on Washington. Alarmed that states might take action independent of the federal government to curb pharmaceutical profits, McKinnell has extended Pfizer’s political influence into state regulatory politics with a vengeance. He set up a new Pfizer department to do nothing but propagate Pfizer’s presence in state Medicaid programs.

In Florida, under pharma-friendly Gov. Jeb Bush, Pfizer has been actively trying to reshape public policy it doesn’t like. Florida law states that for a drug company to have its products included on the state formulary, or list of Medicaid-approved drugs, it must provide a discount to poor and uninsured patients. Pfizer negotiated its way out of the regulation and got its entire line onto the formulary by instead funding a program that seeks to manage chronic patient care via Pfizer-trained medical technicians. These technicians monitor, mostly by phone and computer, the vital signs and drug compliance of patients with diabetes and other chronic diseases. The company also gave $15 million to the state Medicaid fund and promised to save the state an additional $30 million via its monitoring program. The program has so far had mixed results.

Chronic disease management is one of the most costly medical problems on the public health agenda, and it is hard to fault McKinnell for engaging the issue. (He has also been a fairly progressive leader on the African AIDS issue.) But there’s an unasked question in all this activity as well: Why not just play by the rules? Why remake state legislative efforts ex post facto just because you can? In other words, why appear evil when you don’t have to? One troubling answer is that the industry’s political machine simply can’t switch itself off anymore.

That’s something that the president and his party bigwigs never considered. As a result, next fall people might throw peanuts their way instead of votes.